Joan Costa-i-Font (LSE)

We show that sleep deprivation exerts a strong negative effect on labour market performance. We exploit variations in child sleep quality to instrument for parental sleep quality. A one-hour reduction in sleep duration significantly decreases labour force participation, the number of hour’s worked and household income. In addition, we find that low-skilled mothers are more
likely to opt out of the labour market and work less hours than high-skilled mothers when exposed to sleep deprivation. We argue that sleep is a major determinant of employment outcomes that needs more attention in designing economic models of time allocation and employment policies.

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