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While evidence shows that better performing companies have happier employees, there has been much less research on whether happy employees contribute to better company performance. Finding causal relations between employee well-being and company performance is important for firms to justify spending corporate resources to provide a happier work environment for their employees. While correlational and laboratory studies do find a positive relationship, the evidence remains sparse. Key findings Pros Several studies show that a positive mood induces subjects to spend more of their time in more creative tasks. Positive emotions influences the capacity for innovation. Experimental evidence generally shows that positive emotion improves memory. Most studies report that positive emotions improve performance. Cons Most experimental studies have been based on small numbers of subjects who were not incentivized to complete the tasks assigned to them in a laboratory setting. Experimental laboratory evidence is based on student subjects and so is not representative of the working population. Most studies based on real-world data have not been designed to demonstrate causality. A minority of studies report small or even negative effects of positive emotion on productivity. Author's main message Experimental laboratory studies and real-word evidence both validate gains to companies from paying attention to employees' well-being. Happiness seems to motivate greater effort, increasing output without affecting its quality and thus boosting productivity. Both a temporary increase in happiness and long-term changes in baseline happiness are associated with greater productivity. Because most of the evidence is based on correlations or on laboratory studies, more research is needed for definitive guidance; still, the available evidence suggests that companies can be encouraged to introduce policies to increase employee happiness. Download full article (PDF) This article first appeared on IZA World of Labor in December 2016. Reproduced with permission Tweet January 31, 2017 Print Article(s) by this author Are happy workers more productive?Firms' concerns about the well-being of their employees are largely supported by the evidence January 31, 2017[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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