Summary•Individual attachment to the labour market is meas-ured in two ways: first, whether an individual isworking, or searching for work (the participationdimension);and second,how many hours he or sheworks (the hours dimension).•The microeconomic model of consumer choicecan accommodate both dimensions of the laboursupply decision.Consumers choose their preferredcombination of income (consumption) and leisure(nonmarket time),as represented by their opportu-nity set, or budget constraint. If this optimumoccurs at zero hours of work, the individual doesnot participate. If optimal hours are positive, theindividual participates, and the marginal rate ofsubstitution between leisure and consumptionequals the wage rate.•The reservation wage is the critical wage to theparticipation decision: for wage rates above thereservation wage, the consumer will choose towork; for wages below, the consumer will not par-ticipate.The reservation wage is given by the mar-
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