BY THE END OF THIS UNIT YOU WILL BE ABLE TO EXPLAIN THE SHAPE OF THE SUPPLY OF LABOUR CURVE OUTLINE THE DETERMINATES OF THE SUPPLY OF LABOUR CURVE USE THE SUPPLY AND DEMAND MODEL TO ILLUSTRATE THE LABOUR MARKET The Supply Of Labour

Supply of Labour Labour is supplied by households or consumers in return for wages The supply of labour shows the number of workers who are willing to work at each given wage rate. SL Q (hours) W ($/hr) An increase in wages brings about an increase in the quantity supplied for labour a movement along the curve. W1 Q1 W2 Q2YF YF = Full employment

Shape of the supply curve The supply curve slopes upwards from the left to the right. This indicates that as wages rise, more workers are willing to make themselves available for work. Eventually once all available workers are employed (Yf) the additional increases in the wage rate cannot increase the quantity of labour supplied. Thus the curve becomes vertical.

Shifts of the Labour Supply Curv e The other factors that affect the supply of labour are Changes in the size of the population ( Net migration/ rate of natural increase) Changes in the size of the labour force  School leaving age  Compulsory retirement age  Availability of welfare support  Age structure