The core research question addressed in this paper is whether the wellbeing of the workforce contributes to corporate technical efficiency. It is widely recognized that job satisfaction, working in a healthy and safe workplace, diversity, equal opportunities, and development growth (denoted wellbeing) is closely related to productivity. Although the influence of the workforce on firms' ability to maximize output given a set of inputs (i.e. firm efficiency) has not been widely studied, empirical literature has recognized workforce wellbeing is closely related to productivity. Based on a measure of workforce wellbeing of US listed firms across industries from 2005 to 2019, our study makes a novel contribution to this literature. We find a positive association between workforce wellbeing and technical efficiency that is both economically substantial and statistically significant. Firm inefficiency is explained by firm-specific factors and is a decreasing (increasing) function of size and external monitoring (leverage, blockholdings, and foreign sales). This inefficiency can be mitigated through employee-oriented practices, external governance mechanisms and market surveillance. The relationship between workforce wellbeing and technical efficiency is nonlinear and varies across industry sectors. From a policy perspective, our findings highlight the practical impact of workforce wellbeing on corporate technical efficiency.

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