Ignoring the income effect,an increase in the wage rate will cause an increase in labor supply.

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According to the substitution effect, as the wage rate increases, individuals are incentivized to work more because the opportunity cost of leisure (the foregone wage) becomes higher. Therefore, the supply of labor increases. However, the income effect may also influence labor supply. If the wage increase is large enough, individuals may choose to work less because they can achieve their desired level of income with fewer hours worked. But ignoring the income effect, there is a positive relationship between the wage rate and labor supply.

Ignoring the Income Effect,an Increase in the Wage Rate Will