labor force
Of all the people in a country, only some are 'in the game' of working. Babies, schoolchildren, and many retirees are not. Neither is a person who has chosen to stay home and not seek a job. The people who are in the game — either holding a job right now or out there actively trying to get one — make up the labour force. It is the pool of human effort the economy can actually draw on at a given moment.
Defined precisely, the labour force is everyone of working age who is either employed or unemployed (in the strict sense: jobless but actively searching and available). In a formula: labour force = employed + unemployed. Crucially, it leaves out everyone who is neither working nor looking — these people are 'out of the labour force'. A 70-year-old retiree, a full-time university student, a parent raising children at home, and a discouraged worker who has stopped searching are all out of the labour force, no matter how able-bodied they are.
The labour force is the foundation on which other labour numbers are built: the unemployment rate divides by it, and the participation rate measures how much of the working-age population is in it. Because the line between 'unemployed' and 'out of the labour force' is just whether someone is actively searching — a line that is fuzzy in real life — small changes in who counts can move the headline figures noticeably. That fuzziness is why two countries with similar job situations can report quite different unemployment rates.
Imagine a small island of 1,000 working-age adults: 600 have jobs, 40 are jobless but job-hunting, and the other 360 are students, retirees, or staying home. The labour force is 600 + 40 = 640. The 360 who are neither working nor looking are simply not part of it.
The labour force = the employed plus the actively job-seeking; everyone else is outside it.
The boundary of the labour force is set by active searching, not by ability to work. A healthy adult who simply isn't looking for a job counts as outside it, which is why the labour force can shrink even when nothing else changes.