Workforce sleep and corporate innovation

Abstract

This study investigates the relationship between workforce sleep and corporate innovative output. Using comprehensive data on average sleep durations and corporate patenting, we present robust evidence demonstrating that aggregate sleep deficits among employees, engineers, and scientists are associated with declines in corporate patent output. The results further suggest that the decreases in output are greater for novel, breakthrough patents. Reductions in workforce sleep are also associated with declines in total factor productivity at high research-oriented firms. For identification, we apply a spatial regression discontinuity design and a novel natural experiment which induce exogenous changes in workforce sleep durations. Our findings are consistent with the notion that sleep has important value for efficiency and creativity in a firm's innovative process. This work highlights the importance of flexible work policies that allow employees to adjust their schedule to fit their own natural sleep cycle.