The increased work rates likely to make up for the extra costs of the £7.85 wage and create better morale in the workplace, according to the report by Ipsos MORI and Loughborough University.
It comes after Nicola Sturgeon yesterday launched the Scottish Business Pledge which encourages firms to pay the living wage.
Today’s report, entitled Wider Payment of the Living Wage in Scotland, says companies will also be able to recruit higher-calibre staff and have a better working environment.
Roseanna Cunningham, Cabinet Secretary for Fair Work, Skills and Training, said: “This is a fascinating report which, on the whole, offers a very positive outlook on the benefits of paying the living wage.
“As well as the more obvious benefits to individuals receiving higher pay, I hope the findings on improved rates of absenteeism and better productivity help convince employers not already on board with the living wage that it could be a very positive step for their business.”
She added: “The Scottish Government is committed to fairness, supporting those on the lowest incomes, and we recognise the real difference the living wage can make to the people of Scotland.
“We have been working closely with the Poverty Alliance to encourage every employer to ensure all staff receive a fair level of pay.”
The living wage is the level widely seen as being needed for an adequate standard of living compared with the legal minimum wage of £6.50.
But the report does raise concerns that the living wage could leave firms struggling to compete and hit profits by creating an inflationary impact on wages.
The report was compiled using existing research on the impacts and practicalities of introducing the living wage and a series of in-depth interviews with Scottish living wage employers, Scottish Government contractors and organisations representing key sectors and industries.