When there is an increase in the wage rate there will be

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An increase in the wage rate will lead to a substitution effect where firms will substitute labor with more capital or technology. This is because the cost of labor has increased and it becomes relatively cheaper to use other factors of production. Additionally, there will also be an income effect as workers will have a higher income after their wages have increased. This will lead them to work less as they can afford to take more leisure time. Therefore, there will be both a substitution effect and an income effect.

When There Is an Increase in the Wage Rate There