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

Using longitudinal data of Japanese workers, this study investigates 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 work too long (overwork) and, by doing so, impair their physical and/or mental health. We introduce non-pecuniary factors into the conventional utility function. Empirical analysis reveals a non-linear relationship between the number of hours worked and job satisfaction. We find that job satisfaction rises when people work more than 55 hours weekly. However, we also find that hours worked linearly erode workers' mental health. These findings imply that people who overvalue job satisfaction work excessive hours and, as a consequence, damage their mental health. We find that people form incorrect beliefs about the mental health risks of overwork, leading them to work longer hours. These results might justify interventions, such as capping the number of hours worked to reduce related mental issues.