Burnout, absenteeism, and the overtime decision

Although bearing major personal, organizational and social costs, 'burnout' stress syndromes, the consequence of continuing high levels of job stress, have failed so far to attract any analytical economic treatment. This paper constructs a simple model of the burnout process, deriving a positive relationship between absenteeism (due to the depletion of emotional and mental resources) and overemployment under stress conditions. Applying this connection to the firm's cost-minimization problem, the paper shows that burnout-induced absences produce a kink in the labor cost function, as a result of which the firm will employ less overtime per worker and more workers in the presence of absenteeism than in its absence. This result substantially modifies Ehrenberg's (1970) conclusion that a rational economic response to a certain (and exogenous) absentee rate involves increasing overtime per employee, while the effect on the number of workers is ambiguous.