Final answer:
When real wages are above the equilibrium level, the quantity of labor supplied increases, leading to excess supply over demand and higher unemployment, until demand catches up over time.
Step-by-step explanation:
When the real wage is above the level that equilibrates supply and demand in the labor market, the quantity of labor supplied will increase. This is because a higher real wage makes work more financially rewarding relative to leisure, thus incentivizing more workers to offer their labor. However, even though the quantity of labor supplied increases, if the wage is held above the equilibrium wage due to wage stickiness or other factors, this does not change the quantity of labor demanded. Given that wages tend to be sticky downwards, we see a situation wherein the increased quantity of labor supplied (Qs) does not correspond to an increase in jobs available (Qe), leading to an excess of labor supply and thus, an increase in unemployment. Over time, if labor demand grows, it can reduce unemployment and push wages up, but that is beyond the initial impact of a real wage above the equilibrium level.