No Pain, No Gain: Work Demand, Work Effort, and Worker Health

We combine Danish data on individuals’ health with Danish matched worker-firm data, and find: One, within job spells, as firm sales increases, workers log longer hours and experience higher probabilities of stress and depression, and heart diseases and strokes; Two, the effects of firm sales on adverse health outcomes are more pronounced for high-risk groups: older workers, job-strained workers, and those with long initial work hours; Three, the worker cohorts who experience large sales increases develop higher risks of sickness in subsequent quarters. These novel results suggest that work demand increases individuals’ workplace stress and elevates their sickness risk. We then compute the marginal disutility of our sickness variables, and show that the average worker’s ex-ante welfare loss due to higher sickness rates accounts for nearly one quarter of her earnings gains from rising firm sales.