All else constant, a decrease in the per unit price of labor would create an incentive for a firm's manager to substitute labor for capital in the firm's production process

Taking into consideration ceterus paribus, which means that everything else remains constant, a decrease in the per unit price of labor will create an incentive for the firm's manager to substitute labor for capital. This statement can be true, but we need to compare the rental rate of capital and wages.

A decrease in the per unit price of labor means that the cost of hiring each laborer has decreased. If the rental rate is less than the marginal cost of hiring labor, then there will not be any substitution toward labour. However, if the new decrease in wages (the result of the decrease in the per unit price of labor) is lower than the rental rate of capital, then substitution will take place toward hiring more labour.