When the wage rate increases,the hours of work supplied increase initially but can eventually decrease as individuals choose to enjoy more leisure and to work less. The backward-bending portion of the labor supply curve arises when the income effect of the higher wage which encourages more leisure)is greater than the substitution effect which encourages more work ) When the wage rate increases, the hours of work supplied increase initially but can eventually decrease as individuals choose to enjoy more leisure and to work less. The backward-bending portion of the labor supply curve arises when the income effect of the higher wage ( which encourages more leisure ) is greater than the substitution effect ( which encourages more work )