Final answer:
The substitution effect typically motivates a person to supply more hours of labor as wage rate increases, but at a certain point, higher income might lead to a preference for leisure, creating a backward-bending labor supply curve.
Step-by-step explanation:
In response to an increase in the wage rate, the substitution effect will typically cause a person to supply more hours of labor. This is because, as the wage rate rises, the opportunity cost of not working increases, thus workers are incentivized to work more hours to earn at the higher wage rate.
Yet, it's important to consider that in some scenarios, after reaching a certain level of income, individuals may choose to work fewer hours, valuing leisure time over additional income, resulting in a backward-bending labor supply curve. This phenomenon is often seen over long-term trends where higher-earning professionals or average workers over time have opted to reduce work hours in exchange for leisure as their wages have increased significantly.