Backward-Bending Individual Labor Supply Curve At lower wage rates, the substitution effect dominates the income effect for this individual. This is illustrated by the movement along the individual labor supply curve from point A to point B: a rise in the wage rate from W1 to W2 leads the quantity of labor supplied to increase from L1 to L2. But at higher wage rates, the income effect dominates the substitution effect, shown by the movement from point B to point C: here, a rise in the wage rate from W2 to W3 leads the quantity of labor supplied to decrease from L2 to L3.