Economic impacts of illness in older workers: quantifying the impact of illness on income, tax revenue and government spending

Schofield, Deborah J., Shrestha, Rupendra N., Percival, Richard, Passey, Megan E., Kelly, Simon J., and Callander, Emily J. (2011) Economic impacts of illness in older workers: quantifying the impact of illness on income, tax revenue and government spending. BMC Public Health, 11. 418. pp. 1-7.

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Background: Long term illness has far reaching impacts on individuals, and also places a large burden upon government. This paper quantifies the indirect economic impacts of illness related early retirement on individuals and government in Australia in 2009.

Methods: The output data from a microsimulation model, Health&WealthMOD, was analysed. Health&WealthMOD is representative of the 45 to 64 year old Australian population in 2009. The average weekly total income, total government support payments, and total taxation revenue paid, for individuals who are employment full-time, employed part-time and not in the labour force due to ill health was quantified.

Results: It was found that persons out of the labour force due to illness had significantly lower incomes ($218 per week as opposed to $1167 per week for those employed full-time), received significantly higher transfer payments, and paid significantly less tax than those employed full-time or part-time. This results in an annual national loss of income of over $17 billion, an annual national increase of $1.5 billion in spending on government support payments, and an annual loss of $2.1 billion in taxation revenue.

Conclusions: Illness related early retirement has significant economic impacts on both the individual and on governments as a result of lost income, lost taxation revenue and increased government support payments. This paper has quantified the extent of these impacts for Australia.

Item ID: 41394
Item Type: Article (Research - C1)
ISSN: 1471-2458
Keywords: health economics; living standards
Additional Information:

© 2011 Schofield et al; licensee BioMed Central Ltd.

This is an Open Access article distributed under the terms of the Creative Commons Attribution License (, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Funders: Australian Research Council (ARC), Pfizer
Projects and Grants: ARC LP07749193
Date Deposited: 24 Nov 2015 03:56
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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