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Sleep can be disrupted by company schedules and deadlines, extended working times, and several individual and household decisions. Labor market regulation and corporate strategies should factor in the immediate effect of insufficient sleep on employee fatigue and cognitive performance, and the associated effects on employment disruption and productivity loss. Sleep can be influenced by “sleep friendly” employment regulations, technology nudges, monetary incentives, and subsidies for sleeping. Key findings Pros Variable sleep can explain employment fatigue. Sleep deprivation can increase the probability of human error. Reduced sleep time has been shown to directly influence employment outcomes, productivity, and working times. Sleep deprivation gives rise to health effects such as burnout and anxiety, which have additional secondary economic consequences. Behavioral interventions such as bedtime reminders and monetary incentives can help generate more “productive” sleep. Cons Individual sleep reports contain errors in how to measure sleep time and sleep quality, and especially in self-reported fatigue. Time diaries might increase the precision of sleep measures but do not measure sleep quality. Sleep time can be influenced by unforeseeable disruptions such as night temperature and sudden household events (e.g. children waking). The short- and long-term effects of reduced sleep on health and other outcomes are often not factored in when sacrificing sleep quality to attain immediate goals. Company-sponsored wellness programs do not always seriously prioritize sleep as a potential influence on employee productivity. Author's main message Although individuals allocate a large amount of their time to sleep, typically eight to nine hours a day, sleep time is not considered as a determinant of economic performance and well-being. However, it is about time that labor market policy accounts for the role of sleep, given its effects on employment and productivity. Hence, both policymakers and corporations should consider designing policies and offering incentives to increase the time employees devote to sleep. Download full article (PDF) This article first appeared on IZA World of Labor in November 2022. Reproduced with permission Tweet January 6, 2023 Print Article(s) by this author Incentivizing sleep?Insufficient sleep affects employment and productivity January 6, 2023［From IZA］ Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal Communications Newsletter RSS Feed Facebook X YouTube Research Areas Research Programs (FY2024-2028) Research Programs (FY2020-2023) Research Programs (FY2016-2019) Research Programs (FY2011-2015) Policy Research Domains (FY2006-2010) Projects Survey Fellows Research/Policy Papers Discussion Papers (English) Discussion Papers (Japanese) Policy Discussion Papers (English) Policy Discussion Papers (Japanese) Technical Papers (English) Technical Papers (Japanese) Non Technical Summaries List of Articles in Journals Research Digest Discussion Papers Search Publications RIETI Books (English) RIETI Books (Japanese) History of Japan's Trade and Industry Policy Authors' Words Other Publications (English) Other Publications (Japanese) Events Symposiums Workshops BBL Seminars Archived Seminar Series Data JIP Database R-JIP Database CIP Database Industry-Specific Nominal and Real Effective Exchange Rates AMU and AMU Deviation Indicators JSTAR RIETI-TID RIETI FDI Database ICPA Project Links Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal (METI Journal) About RIETI Privacy Policy Site Policy Site Map Help Contact METI Web Site Research Institute of Economy, Trade and Industry, IAA (JCN 6010005005426)JCN: Japan Corporate Number Opinions expressed or implied on this website are solely those of the author, and do not necessarily represent the views of the Research Institute of Economy, Trade and Industry (RIETI).Titles, numbers, specific names, etc. on this website are as of the date of publication. 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