Answer
Please see the graph. The original equilibrium amount of leisure and earnings was $L_{0}$ and $E_{0}$, respectively. With an increase in wages, the amount of leisure decreases to $L_{1}$, and the amount of earnings increases to $E_{0}$.
Work Step by Step
Under the substitution effect, when wages increase, leisure becomes more expensive. Thus, you shift away from leisure and toward work.
Since your income increases, your budget constraint curve and your indifference curve also change. The indifference curve shifts out. We are assuming both work (consumption) and leisure are normal goods.
Under the income effect, an increase in income would increase work (consumption) and leisure. However, if leisure is an inferior good, the income effect would shift your leisure to work.
