For those people who continue to work, the parallel drop is equivalent to a fall in unearned income. Leisure being a normal good, work hours will rise . Fewer people will participate in the labor force. Consider next the implications of fixed time costs of work. When TK rises, the budget line corresponding to work shifts to the left in a parallel fashion.
Fewer people choose to participate in the labor force.
For those who continue to work, the increase in time cost amounts to a fall in unearned income. If consumption is a normal good, people will consume less. Empirical studies of labor supply Over the long term, real wages have risen, but hours worked and labor participation have fallen for men, while hours and participation have risen for women. Thus the strength of the income effect is smaller for women than for men. Cross section studies of male labor supply often find that the income effect dominates the substitution effect.