Does Employee Happiness have an Impact on Productivity?

Abstract

This paper provides evidence from a natural experiment on the relationship between positive affect and productivity. We link highly detailed administrative data on the behaviors and performance of all telesales workers at a large telecommunications company with survey reports of employee happiness that we collected on a weekly basis. We leverage variation in a worker's visual exposure to weather while at work in order to derive quasi-experimental estimates for the causal effect of happiness on productivity. We find a strong effect of happiness on sales performance, which is driven by changes in labor productivity -- largely through workers converting more calls into sales, and to a lesser extent by making more calls per hour and adhering more closely to their schedule. We find no evidence in our setting of effects on measures of high-frequency labor supply such as attendance and break-taking.

JEL Classification: JEL, D03, J24, M5, I31