Why Do People Overwork at the Risk of Impairing Mental Health?

Abstract

This study uses longitudinal data on Japanese workers to investigate the relationship between overwork and mental health. Conventional labor supply theory assumes that people allocate their hours of work and leisure to maximize personal utility. However, people sometimes overwork and underestimate the risks of its negative impact on their physical and/or mental health. We incorporate nonpecuniary factors into the conventional utility function. Empirical analysis reveals a nonlinear relationship between the number of hours worked and job satisfaction. We find that job satisfaction increases when people work more than 55 h per week. However, we also find that hours worked linearly erode workers’ mental health. These findings imply that people who overvalue job satisfaction work excessive hours, consequently damaging their mental health. People may hold incorrect beliefs and underestimate the mental health risks of overwork, which may lead them to work longer hours. Our findings imply that educational and regulatory interventions are needed for both workers and employers to reduce the detrimental impacts on mental health caused by overwork.