After World War II many countries struggled with poverty and unemployment. Schultz popularized the idea of “human capital,” arguing that investments in education and health raise future income. Lewis, on the other hand, proposed the “dual-sector model,” mathematically describing how surplus rural labor moves to urban industry and boosts overall productivity. Their theories became foundations for aid programs and industrialization policies. By focusing on poverty reduction and income distribution, they significantly advanced traditional growth theory. Today’s SDGs still reflect their perspectives.

Schultz began with empirical studies in agricultural economics, showing how distorted price policies depress farmers’ willingness to invest. In the 1960s he calculated rates of return on education and health, arguing that the quality of labour—human capital—is a key determinant of growth. Lewis, in his landmark 1954 paper, introduced the “dual-sector model” with the surplus-labor hypothesis: as long as industrial wages stay above subsistence, rural labour will migrate to cities almost without limit. Profits reinvested in industry enlarge the capital stock until the “Lewis turning point,” where wages start to rise. Their work explicitly modelled “structural transformation,” incorporating income distribution and institutional factors that classical growth models ignored. It influenced development, agricultural, and labour economics as well as later endogenous-growth theory. Policy prescriptions such as land reform, agricultural price supports, expanded schooling, and import-substitution industrialization drew theoretical backing from their findings. Recent research revisits their models, addressing under-estimated residual rural labour and expanding urban informal sectors. Traces of the Lewis framework appear in Olivier Blanchard’s unemployment models and dual-sector DSGE approaches, keeping the dialogue alive between development economics and modern macro.

Schultz applied a latifundian demand framework and stochastic frontier estimation to demonstrate quantitatively how deficient price signals impede technological adoption among farmers considered “efficient but poor.” His cross-country human-capital comparisons extended Mincerian rate-of-return equations with microdata, identifying heterogeneity by schooling stage. Lewis, by simplifying general equilibrium into a dual-sector schema, linked a Marxian surplus-value intuition to neoclassical wage determination, closing the capital-accumulation equation under a zero marginal product of labour assumption. The Ranis–Fei extension made the agricultural surplus explicit and endogenized wage–profit share dynamics along the transition path. Recent CGE and DSGE calibrations add an urban informal third sector and embed stepwise wage rigidities. Multi-sector dynamic models increasingly separate Hicks-neutral from labour-saving biases to trace agricultural TFP shock propagation. Cutting-edge development macro econometrics inject survey-based migration-cost estimates into dual-sector OLG frameworks. Schultz–Lewis line theories thus remain highly relevant as lenses integrating structural change and distribution.