The personal and national costs of early retirement because of spinal disorders: impacts on income, taxes, and government support payments

Schofield, Deborah J., Shrestha, Rupendra N., Percival, Richard, Passey, Megan E., Callander, Emily J., and Kelly, Simon J. (2012) The personal and national costs of early retirement because of spinal disorders: impacts on income, taxes, and government support payments. The Spine Journal, 12 (12). pp. 1111-1118.

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Abstract

Background context: Spinal disorders can reduce an individual's ability to participate in the labor force, and this can lead to considerable impacts on both the individual and the state.

Purpose: This study was aimed to quantify the personal cost of lost income and the cost to the state from lost income taxation, increased benefits payments, and lost gross domestic product (GDP) as a result of early retirement because of spinal disorders in Australians aged 45 to 64 years in 2009.

Methods: This was done using cross-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. Linear regression models were used to examine the relationship between spinal disorders, labor force participation, income, taxation, and government support payments.

Results: It was found that individuals aged 45 to 64 years who have retired early because of spinal disorders have significantly lower income (79% less; 95% confidence interval [CI], −84.7, −71.1; p<.0001), pay significantly less taxation (100% less; 95% CI, −100.0, 99.9; p<.0001), and receive significantly more in government support payments (21,000% more; 95% CI, 12,767.0, 35,336.4; p<.0001) than those employed full time with no health condition. Individuals who have retired early because of spinal disorders have a median value of total weekly income of only AU$310, whereas those who are employed full time are likely to receive four times this. This has a large national aggregate impact, with AU$4.8 billion lost in annual individual earnings, AU$622 million in additional welfare payments, AU$497 million lost in taxation revenue for governments, and AU$2.9 billion in lost GDP: all attributable to spinal disorders through their impact on labor force participation.

Conclusions: Although the individual has to bear the economic costs of lost income in addition to the burden of the condition itself, the state experiences the impacts of loss of productivity from reduced workforce participation, lost income taxation revenue, and increasing government support payments.

Item ID: 41326
Item Type: Article (Research - C1)
ISSN: 1878-1632
Keywords: income; taxes; retirement; economic impacts; health economics; living standards
Funders: Australian Research Council (ARC), Pfizer
Projects and Grants: ARC LP07749193
Date Deposited: 17 Nov 2015 04:06
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140208 Health Economics @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910209 Preference, Behaviour and Welfare @ 50%
92 HEALTH > 9204 Public Health (excl. Specific Population Health) > 920408 Health Status (e.g. Indicators of Well-Being) @ 50%
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