Determinants of labour supply

The supply of labour depends on a number of factors which include the following:-

· Size of the population: Labour is derived from the population and when the population size is big, other factors remaining constant the supply of labour is also high. On the other hand, small population size reduces labour supply. This means population size is directly related to the labour supply in the economy.

· Population growth rate: A fast growing population leads to high supply of labour and vice versa.

· The age composition of the population: Labour supply is normally affected by the percentage of the population that is of a working age. If in the population, a bigger percentage is below the working age or above the retirement age, the supply of labour will be low even if the population is big.

· Working conditions:-It is not just the size of population that determine labour supply but also the average number of hours which each person works. If the working hour is small, the supply of labour will also be low and vice versa. For example the supply of labour by ten men working four hours a day is the same as supply of labour by five men working eight hours a day. In addition, a comfortable working place, and satisfactory conditions will improve labour supply.

· Duration of education and training: lf the training period for labour is very long, the labour supply will be low and vice versa. This is because people will be staying in the training institutions for a very long time thereby reducing the supply of labour. This explains why supply of labour in the medical and engineering professions is low due to long period of training.

· Labour laws of the country:. Each country sets its own laws regarding age for entering work force and retirement. If the national labour laws set a very high age for child labour and a low retirement age, the supply of labour falls and vice versa other factors remaining constant.

· Attitude of workers: lf people are ambitious and hardworking, labour supply will be more. In societies where women are not allowed to work, the supply of labour is usually very low and vice versa.

· Work leisure ratio: At lower levels of. wages, workers tend to work for longer hours i.e. However, at high levels of wage, is a strong preference of leisure to work and hours of labour supply drop.

· Mobility of labour:-If the labour force in the country is highly mobile both geographically and occupationally, the supply of labour will be high. But in societies where people are attached to their traditions and culture and are not willing to move to other areas, supply of labour will below.

· Remunerationl Wage rate: A reasonably high wage rate linked with the cost of living index will bring more supply of labour. In a situation where the wage rate is Iowan increase in wages will tend to lead an increase in supply of labour and vice versa other factors remaining constant.

· General wealth and stamina. Healthy people will have more stamina to work and this will improve labour supply. Health of workers depends upon their living conditions and the climate of the place.

· Non-monetary factors. Fringe benefits, job satisfaction, future promotion, willingness of the individuals also playa vital role in determining the supply of labour.

· Quality of Human capital:- Investment on human capital through education, training, public health etc. will improve the quality and effectiveness of labour supply.