AbstractOne of the most important components of health care systems is human resources for health (HRH)—the people that deliver the services. One key challenge facing policy makers is to ensure that health care systems have sufficient HRH capacity to deliver services that improve or maintain population health. In a predominantly public system, this involves policy makers assessing the health care needs of the population, deriving the HRH requirements to meet those needs, and putting policies in place that move the current HRH employment level, skill mix, geographic distribution and productivity towards the desired level. This last step relies on understanding the labour market dynamics of the health care sector, specifically the determinants of labour demand and labour supply. We argue that traditional HRH policy in developing countries has focussed on determining the HRH requirements to address population needs and has largely ignored the labour market dynamics aspect. This is one of the reasons that HRH policies often do not achieve their objectives. We argue for the need to incorporate more explicitly the behaviour of those who supply labour—doctors, nurses and other providers—those who demand labour, and how these actors respond to incentives when formulating health workforce policy. Copyright © 2006 John Wiley & Sons, Ltd.