NEW YORK (NYTIMES) - It is widely known that sleep affects one's mood and health. Less understood is how it can also affect a person's salary.

A study published last year in the Review of Economics and Statistics found that workers who live in locations where people get more sleep tend to earn more than those in areas where people get less.

One theory: Better-rested workers are more productive and are compensated for it with additional income.

"There are other explanations, but we consider them less likely," said an author of the study, Mr Matthew Gibson, an economist at Williams College.

It is not as if simply sleeping more will lead to the boss paying the employee more. In fact, if people get that extra sleep by being late for work, they might earn less or even lose their job. So how would the sleep-income relationship actually work?

Studying the issue is complicated by reverse causality: Not only does sleep affect work, but work also affects sleep.

On an individual level, people who work more, and earn more for it, often sleep less. Studies show that higher-income earners sleep less than lower-income ones.

That could be because higher-income people are spending more time working, so they have less time for sleep. Additionally, working more is stressful, and stress disrupts sleep.

But poor sleep contributes to stress, too.

A study in Sleep Health found that a poorer night's sleep is followed by more stress and distracting thoughts at work. Other studies also find that less and poorer sleep is associated with more conflict and stress the next day.

Consider this possible sequence: Good sleep habits could help a person land a high-income job, but the new job could be so demanding and stressful that the person sleeps less. To achieve a promotion, though, and even higher income, it could be helpful to make adjustments to get better sleep again.

More generally, many studies find worse work performance follows poor sleep. For example, tired doctors make more mistakes, and tired students get lower test scores. This is one rationale for starting school times later to give children a better chance at more sleep. It lifts not only academic performance but also their long-run incomes, research shows.

One study found that delaying school start times to 8.30am or later would contribute US$83 billion (S$113 billion) to the US economy within a decade. The gains would come in part through decreased car crashes - lowering the costs in mortality and lifetime productivity. Another contributor would be the students' increased lifetime earnings from better school results.

The Review of Economics and Statistics study dodged reverse causality when comparing average earnings in different locations by exploiting the variation in sunset time within time zones.

People's circadian rhythms are partly tied to sunlight: People tend to go to bed earlier when sunset is earlier. But the time of sunrise has less effect on sleep habits.

Workers in similar jobs wake up at roughly the same time, because work and school tend to start at the same time throughout a time zone. Therefore, workers farther east in a time zone, where the sun sets earlier, get on average more sleep than comparable workers farther west.

Of course, many other factors besides sunset time can influence how much individuals sleep. There are people who seem to get by just fine on short rest. Some studies in recent years have identified a genetic explanation for why some can thrive despite getting a lot less than eight hours of sleep.

But few other factors could affect sleep duration for an entire region.

The time-zone study found that an additional hour of weekly sleep could increase earnings by 1.1 per cent in the short run and as much as 5 per cent in the long run.

"You likely won't get a 5 per cent increase in your income from sleeping an extra hour if your neighbours and co-workers don't do the same," said Mr Jeffrey Shrader, the other study author and an economist at Columbia University. "The income boost relies on everyone in an area sleeping more."

The idea is that the entire economy is running at a slightly faster pace when everyone in it is better rested.