This analysis looks at the individual labour supply decision and in particular the work-leisure trade off and how this is affected by a change in wages.
The income effect of a rise in the hourly wage rate
The substitution effect of a rise in the hourly wage rate
Some people may have a backward bending individual labour supply curve – they may choose to work fewer hours when the wage rate rises (ceteris paribus)
© 2022 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.