The Supply of Labour

Abstract

There are several dimensions to the supply of labour, the most important being quantity, quality, intensity and location. From the viewpoint of the individual, two decisions determine the quantity of labour supplied: whether or not to work, and for how long. In aggregate the supply of labour to the entire economy is the product of the participation rate, which measures the proportion of the population which is in work or seeking a job, and the average hours per person which are worked in each period. The quality of labour supply depends upon the degree of skill which has been acquired through education and through formal or informal (on-the-job) training. The intensity of labour supply is determined by the degree of effort that is performed. Finally, locational decisions relate to the firm, industry and region to which labour is supplied.