Labour force refers to the number of persons able and willing to work in a country. Labour supply refers to the total number of hours this labour force is willing to work. Labour supply is also called supply of effect because labour supply is measured in terms of efforts to work or hours of work put in by lobour. Supply of labour or effort supply depends upon (i) size of Population, (ii) size of labour Farce and (iii) Hours of Work put in by labour force.
Population. Size of population is determined largely by non – economic factors such as universality of marriage, age at marriage, social status of women, social and cultural practices, religious beliefs, etc. some economic factors such as income level, educational attainment, health consciousness and health facilities population lie outside economics.
Labour Force. Labour force comprises of persons who are able and willing to work. Logically, it excludes certain parts of population such as children and old persons who are not able to work. Thus, labour force refers to that portion of total population which is able, willing and available for work. The ratio of this group of people (labour force) to total population is called labour force participation rate. Many non – economic factors, such as changes in attitude towards female participation in work have contributed to increase in labour force. On economic side, change in demand for labour which causes rise in earning usually attracts more people to work and increases labour force.
Hours of Work. Labour supply refers to the number of people willing to work and the number of hours they are willing to work. Wage rate affects not only the number of persons willing to work (labour force) but also the number of hours they are willing to work. A higher wage rate (per hour) increases the opportunity cost of leisure and induce people to work for longer hours. By giving up some leisure, people can get more income and consumer more goods thus improving their living standards. Thus, generally supply of labour is larger at higher wage rate and falls when wage rate is lower.