Final answer:
A reduction in the demand for labor within the labor market model, when wages are sticky downwards, leads to an increase in unemployment due to the inability of workers to find jobs at the original wage.
Step-by-step explanation:
Based on the labor market model, a reduction in the demand for labor (denoted by 'm' in the question) typically leads to a situation where wages do not decline. According to the information provided, when there is a fall in the demand for labor and wages are sticky downward, the quantity of labor demanded at the original wage declines from Qo to Q2.
Workers are willing to work at the original wage (Wo), but due to the reduced demand, not all can find jobs, leading to increased unemployment (Un). Therefore, a reduction in 'm', or a fall in the demand for labor, would likely cause an increase in unemployment.