ABSTRACT
Labour adjustments mean changes in the stocks of labour in one or more sectors of the economy. Labour supply is multidimensional. In reality several different labour supply adjustments are the outcome of a single household decision. Various stock adjustments and flows are therefore interdependent. However this chapter, to assist exposition, considers supply adjustments and analyses them largely independently. It considers hours supply adjustments; participation adjustments; and the two forms of skill supply adjustment. Firm will find that the hours of overtime it is offered will be closely related to the hours it has demanded in the past. Occupational mobility may involve a change of firm. In a world of limited information this will involve the worker in the expense of screening and expose her to uncertainty. The higher are screening costs the less attractive will occupational mobility is. Workers will tend to limit their moves to within the same geographical location and the same industry.
