8.3.5—Labour supply determinants

Labour supply is the amount of labour workers are willing and able to offer at different wage rates. It depends on the wage, non-wage benefits, working conditions, preferences, skills, migration and the opportunity cost of leisure.

At individual level, a higher wage can encourage work by raising the reward, but at high incomes the income effect may encourage more leisure. Market labour supply also reflects population, participation and occupational mobility.

A flexible schedule may attract workers even at the same wage; a shortage of childcare can reduce the hours supplied despite a higher hourly rate.

Labour supply is not simply the number of people of working age, and willingness to work is not the same as being employed.