BackgroundMental health conditions have the ability to interrupt an individual's ability to participate in the labour force, and this can have considerable follow on impacts to both the individual and the state.MethodCross-sectional analysis of the base population of Health&WealthMOD, a microsimulation model built on data from the Australian Bureau of Statistics' Survey of Disability, Ageing and Carers and STINMOD, an income and savings microsimulation model was used to quantify the personal cost of lost income and the cost to the state from lost income taxation, increased benefits payments and lost GDP as a result of early retirement due to mental health conditions in Australians aged 45-64 in 2009.ResultsIndividuals aged 45 to 64 years who have retired early due to depression personally have 73% lower income then their full time employed counterparts and those retired early due to other mental health conditions have 78% lower incomes. The national aggregate cost to government due to early retirement from these conditions equated to $278 million (£152.9 million) in lost income taxation revenue, $407 million (£223.9 million) in additional transfer payments and around $1.7 billion in GDP in 2009 alone.ConclusionsThe costs of mental health conditions to the individuals and the state are considerable. While individuals has to bear the economic costs of lost income in addition to the burden of the conditions itself, the impact on the state is loss of productivity from reduced workforce participation, lost income taxation revenue, and increased government support payments - in addition to direct health care costs.
Objectives: To estimate (1) productive life years (PLYs) lost because of chronic conditions in Australians aged 45–64 years from 2010 to 2030, and (2) the impact of this loss on gross domestic product (GDP) over the same period. Design, setting and participants: A microsimulation model, Health&WealthMOD2030, was used to project lost PLYs caused by chronic conditions from 2010 to 2030. The base population consisted of respondents aged 45–64 years to the Australian Bureau of Statistics Survey of Disability, Ageing and Carers 2003 and 2009. The national impact of lost PLYs was assessed with Treasury's GDP equation. Main outcome measures: Lost PLYs due to chronic disease at 2010, 2015, 2020, 2025 and 2030 (ie, whole life years lost because of chronic disease); the national impact of lost PLYs at the same time points (GDP loss caused by PLYs); the effects of population growth, labour force trends and chronic disease trends on lost PLYs and GDP at each time point. Results: Using Health&WealthMOD2030, we estimated a loss of 347 000 PLYs in 2010; this was projected to increase to 459 000 in 2030 (32.28% increase over 20 years). The leading chronic conditions associated with premature exits from the labour force were back problems, arthritis and mental and behavioural problems. The percentage increase in the number of PLYs lost by those aged 45–64 years was greater than that of population growth for this age group (32.28% v 27.80%). The strongest driver of the increase in lost PLYs was population growth (accounting for 89.18% of the increase), followed by chronic condition trends (8.28%). Conclusion: Our study estimates an increase of 112 000 lost PLYs caused by chronic illness in older workers in Australia between 2010 and 2030, with the most rapid growth projected to occur in men aged 55–59 years and in women aged 60–64 years. The national impact of this lost labour force participation on GDP was estimated to be $37.79 billion in 2010, increasing to $63.73 billion in 2030.
BackgroundThe costs of arthritis to the individuals and the state are considerable.MethodsCross-sectional analysis of the base population of Health&WealthMOD, a microsimulation model of 45 to 64 year old Australians built on data from the Australian Bureau of Statistics’ Survey of Disability, Ageing and Carers and STINMOD, an income and savings microsimulation model.ResultsIndividuals aged 45 to 64 years who had retired early due to arthritis had a median value of AU$260 in total weekly income whereas those who were employed full time were likely to average more than five times this. The large national aggregate impact of early retirement due to arthritis includes AU$9.4 billion in lost GDP, attributable to arthritis through its impact on labour force participation.When looking at the ongoing impact of being out of the labour force those who retired from the labour force early due to arthritis were estimated to have a median value of total savings by the time they are 65 of as little as $300 (for males aged 45–54). This is far lower than the median value of savings for those males aged 45–54 who remained in the labour force full time, who would have an estimated $339 100 of savings at age 65.ConclusionsThe costs of arthritis to the individuals and the state are considerable. The impacts on the state include loss of productivity from reduced workforce participation, lost income taxation revenue, and increased government support payments – in addition to direct health care costs. Individuals bear the economic costs of lost income and the reduction of their savings over the long term.
This paper quantifies the relationship between early retirement due to back problems and wealth, and contributes to a more complete picture of the full costs associated with back problems. The output data set of the microsimulation model Health&WealthMOD was analysed. Health&WealthMOD was specifically designed to measure the economic impacts of ill health on Australian workers aged 45-64 years. People aged 45-64 years who are out of the labour force due to back problems have significantly less chance of having any accumulated wealth. While almost all individuals who are in full-time employment with no chronic health condition have some wealth accumulated, a significantly smaller proportion (89%) of those who have retired early due to back problems do. Of those who have retired early due to back problems who do have some wealth, on average the total value of this wealth is 87% less (95% CI: -90 to -84%) than the total value of wealth accumulated by those who have remained in full-time employment with no health condition controlling for age, sex and education. The financial burden placed on those retiring early due to back problems is likely to cause financial stress in the future, as not only have retired individuals lost an income stream from paid employment, but they also have little or no wealth to draw upon. Preventing early retirement due to back problems will increase the time individuals will have to amass savings to finance their retirement and to protect against financial shocks.
This study undertook an economic analysis of the costs of early retirement due to back problems, with the aim of quantifying how much lower the value of accumulated wealth of individuals who exit the workforce early due to back problems is by the time they reach the traditional retirement age of 65 years--compared to those who remained in the workforce. This was done using the output dataset of the microsimulation model Health&WealthMOD. It was found that over 99% of individuals who are employed full time will have accumulated some wealth at age 65 years, whereas as little as 74% of those who are out of the labour force due to back problems will have done so. Those who retire from the labour force early due to back problems will have a median value of total accumulated wealth by the time they are 65 of as little as $3708 (for women aged 55-64 years). This is far lower than the median value of accumulated wealth for those women aged 55-64 years who remained in the labour force full time, who will have $214,432 of accumulated wealth at age 65 years. Not only will early retirement due to back problems limit the immediate income available to individuals, but it will also reduce their long-term financial capacity by reducing their wealth accumulation. Maintaining the labour force participation of those with back problems, or preventing the onset of the disease, should be a priority in order to maintain living standards comparable with others who do not suffer from this condition.
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