What happens when wage rates increase regarding labor supply?

When wage rates increase, the labor supply typically increases. Higher wages act as an incentive for more individuals to enter the workforce or for current workers to offer more hours of work. This increase is based on the principle of supply and demand in the labor market; as compensation rises, individuals are more willing to provide their labor because the opportunity cost of not working (i.e., the income they forego) increases.

This phenomenon occurs because higher wages can make jobs more attractive, prompting people who might have been unwilling to work at lower wage rates to seek employment. Additionally, those who are already employed may be motivated to work more hours or take on additional jobs in response to an increase in wage rates.

In contrast, a decrease in labor supply would imply that fewer workers are willing or able to work, and an unchanged or unaffected supply would suggest wage rates have no impact on individuals' decisions to work, which is not consistent with economic principles regarding wage incentives.