Time Use and Productivity: The Wage Returns to Sleep

While economists have long been interested in effects of health and human capital on productivity, less attention has been paid to the influence of time use. We inves-tigate the productivity effects of the single largest use of time—sleep. Because sleep influences performance on memory and focus intensive tasks, it plausibly affects eco-nomic outcomes. We identify the effect of sleep on wages by exploiting the relationship between sunset time and sleep duration. Using a large, nationally representative set of time use diaries from the United States, we provide the first causal estimates of the impact of sleep on wages: a one-hour increase in long-run average sleep increases wages by 16%, equivalent to more than one year of schooling. We also document the non-linearity of the sleep-wage relationship. Our results highlight the economic importance of sleep and pose potentially fruitful questions about the effects of time use on labor market outcomes. (JEL No. J22, J24, J31