Backward bending supply curve of labour

Such a comparison generally means that a higher wage entices people to spend more time working for pay; the substitution effect implies a positively sloped labour supply curve.

However, the backward-bending labour supply curve occurs when an even higher wage actually entices people to work less and consume more leisure or unpaid time.

As wages increase above the subsistence level (discussed below), there are two considerations affecting a worker's choice of how many hours to work per unit of time (usually day, week, or month).

That effect creates an "inverted S" or "backward S" shape: a tail is added at the bottom of the labour-supply curve shown in the graph above with the quantity of labour-time supplied falling as wages rise.

Then, because families face some minimum level of income needed to meet their subsistence requirements, lowering wages increases the amount of labour-time offered for sale.