Most people spend the best part of their day pursuing their employers interests instead of their own. It's no wonder people want to relax during their time off! Clothing, cars, and houses become coping mechanisms for dealing with their situation. This is a very real reality for a lot of people.
Reducing your hours is a risky proposal. Even asking your boss about it can be a big risk. Becoming a contractor is a big risk too. The reality is that, for most people, their boss owns most of their lives, and trying to go off on their own is very risky. Plus you risk messing up your resume and having to explain yourself which is yet another thing working against you.
So yes, being employed might put food on your table and a roof over your head. If your a software developer it'll even let you buy gadgets and take vacations. However, the current system prevents people from reaching farther up Maslow's Hierarchy of Needs, because taking that next step to pursue your own interests in very risky and expensive.
So to answer your question, I don't think you need incentives. You need to enable people to pursue their intrinsic motivations.