In the laboratory, they found happiness made people around 12 per cent more productive. (Agencies)
Professor Andrew Oswald, Dr Eugenio Proto and Dr Daniel Sgroi from the Department of Economics at the University of Warwick led the research.
This is the first causal evidence using randomised trials and piece-rate working.
The study, to be published in the Journal of Labor Economics, included four different experiments with more than 700 participants.
During the experiments, a number of the participants were either shown a comedy movie clip or treated to free chocolate, drinks and fruit.
Others were questioned about recent family tragedies, such as bereavements, to assess whether lower levels of happiness were later associated with lower levels of productivity.
Professor Oswald said: "Companies like Google have invested more in employee support and employee satisfaction has risen as a result.
"For Google, it rose by 37 per cent, they know what they are talking about. Under scientifically controlled conditions, making workers happier really pays-off."
Dr Sgroi added: "The driving force seems to be that happier workers use the time they have more effectively, increasing the pace at which they can work without sacrificing quality."
Dr Proto said the research had implications for employers and promotion policies.
He said: "We have shown that happier subjects are more productive, the same pattern appears in four different experiments.
"This research will provide some guidance for management in all kinds of organisations, they should strive to make their workplaces emotionally healthy for their workforce."
In the laboratory, they found happiness made people around 12 per cent more productive.