Arthur Brooks (via Mankiw) in the WSJ writes:
For most Americans, work is a rock-solid source of life happiness. Happy people work more hours each week than unhappy people, and work more in their free time as well. Even more tellingly, people with more hours per day to relax outside their jobs are not any happier than those who have less non-work time. In short, the idea that our heavy workloads are lowering our happiness is twaddle.
Obviously, there is a point beyond which work is excessive and lowers life quality. But within reasonable bounds, if happiness is our goal, the American formula of hard work appears to function pretty well.
This may be one reason why Americans tend to score better than Europeans on most happiness surveys. For example, according to the 2002 International Social Survey Programme across 35 countries, 56% of Americans are “completely happy” or “very happy” with their lives, versus 44% of Danes (often cited in surveys as the happiest Europeans), 35% of the French and 31% of Germans. Those sweet five-week vacations and 35-hour workweeks don't seem to be stimulating all that much félicité. A good old-fashioned 50-hour week might be a better option.
I think the wealthier societies become, the more work is likely to be a source of satisfaction, since the more likely it is that people will have the opportunity to work at jobs they find individually satisfying. This is even more likely to be the case when labor markets are relatively unregulated, making it easier for people to test the waters of lots of different kinds of careers, or to make big mid-career changes, without too much fear of of getting (semi-)permanently locked out of the market.
Whether or not work makes you happy depends on what kind of work it is; whether or not leisure time makes you happy depends on how you use it; whether or not money makes you happy depends on how you spend it. Work, leisure, and money are all good for happiness. What we need to understand is how different kinds of people can best match up with different patterns of working, relaxing, and spending.