Final answer:
It is true that a worker's labor supply might decrease as the wage increases, due to the income effect outweighing the substitution effect. However, this does not make leisure a Giffen good. Workers with longer hours may decrease labor supply more significantly upon a wage increase due to a stronger income effect.
Step-by-step explanation:
The statement that a worker's labor supply might decrease if the wage increases are true, and this is due to the relationship between the substitution effect and the income effect. An increase in wage rates makes leisure more expensive, leading workers to substitute away from leisure and towards more labor (substitution effect). However, because they are now earning a higher wage, they may also feel wealthier and desire more leisure, which they can now afford (income effect). Depending on the individual's preferences, the income effect can outweigh the substitution effect, resulting in a decreased labor supply despite an increase in wage. This phenomenon does not necessarily classify leisure as a Giffen good, which is a product that people consume more of as the price rises, because the consumption of leisure in response to changes in wage is driven by a combination of income and substitution effects, not just price changes.
For an individual who previously worked many hours, such as 50 hours a week, the income effect may be more pronounced because a wage increase substantially raises their overall income, which may increase their demand for leisure. Conversely, the individual working fewer hours, like 15 hours a week, may experience a less substantial income effect from a wage increase and therefore might continue to work the same number of hours or even more.