Too stressed to sleep? Downsizing, job insecurity and sleep behavior.

While workforce downsizing can benefit firms by increasing efficiency, it also leads to a deterioration of worker job security. This study uses German survey data to investigate the impact of downsizing on quality and quantity of sleep. While the topic is largely unexplored, it is of central importance, as sleep is not only the most time-consuming activity in the life of individuals, but also highly essential for productivity, health, and life itself. To address potential endogeneity, the study employs three measures of downsizing: Workforce reduction at the firm level, dismissal rate at the industry level, and nationwide news of downsizing. The results show that all three measures of downsizing lead to poor sleep. The study further investigates the role of job insecurity as a potential mechanism. Instrumental variable estimates indicate that perceived job insecurity strongly increases the probability of insufficient sleep.

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