Labour Supply, Life Satisfaction, and the (Dis)Utility of Work

In economic theory, it is typically assumed that there is a disutility of labour. However, empirical research on subjective well-being has consistently shown that unemployed people are less happy than employed people, even after taking income differences into account. In this paper, we attempt to reconcile both findings. We show that happiness and work hours exhibit an inverse U-shaped relation working longer raises the level of happiness, as long as the total working time is not too long. Hence, working can be beneficial for happiness and, at the same time, it can exert a disutility at the margin.