The trade-off between work and leisure underlying the supply of labor involves the substitution effect and the:

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The income effect refers to how a change in the relative price of work and leisure affects the individual's real income and therefore, their demand for both goods. As the price of leisure increases (e.g. due to higher wages), the individual's real income increases, which can lead to either an increase or decrease in the demand for leisure depending on how the individual values it. This effect is important in determining the overall impact of changes in wages on the supply of labor.

The Trade-Off Between Work and Leisure Underlying the Supply of Labor