This cross section micro model of labor supply uses area variables to identify the response of individuals to area labor market conditions, while simultaneously estimating individual and family effects on labor supply. Interactions between variables are specified in the model, as are the relative effects of offsetting variables, such as the income and substitution effects. Using a continuous measure of labor supply, the study analyzes separately the labor force behavior of men, women, and youth during the 1966-67 period of high employment. Because of large discouragement effects which were found among marginal workers, the study concludes that present manpower programs underestimate the problem of hidden unemployment. In addition, the discovery that hourly earnings and hours supplied are inversely related provides support for new policies of income redistribution. Applications of the model in projecting future labor force participation are discussed. (BH)