Final answer:
The substitution effect of a tax increase is likely to be stronger for primary earners because they contribute more to the household income and face a significant increase in the opportunity cost of leisure, which can lead to an increase in labor supply to compensate for the lost income.
Step-by-step explanation:
In considering the income and substitution effects of a tax increase on different types of workers, we look at how each group responds to changes in effective wages. The substitution effect occurs when workers adjust their labor supply because the relative price of leisure has increased due to a decrease in after-tax wages; they substitute labor for leisure because the opportunity cost of leisure is now higher. The income effect describes the change in labor supply resulting from the change in purchasing power or real income; workers may choose more leisure because they feel poorer.
For primary earners, the substitution effect is often stronger because their wage typically represents a significant portion of the household's income, and a decrease in wages due to higher taxes would significantly increase the opportunity cost of leisure, pressing them to maintain or increase their labor supply to compensate for the lost income. In contrast, secondary earners often have a smaller contribution to the total household income and may have a greater flexibility in adjusting their labor supply. Thus, the income effect might have a more substantial impact on their decision to work more or less. Secondary earners might reduce their labor supply in response to the household feeling poorer, as additional income is less imperative.