AboutSubmit my research

Health, Labour supply and demand

Research articles · Dec 31, 2011

Projecting the impacts of illness on labour force participation: An application of Health&WealthMOD

Deborah Schofield, Rupendra Shrestha, Megan Passey, Susan Fletcher, Simon Kelly, Richard Percival

Department of Rural Health, Northern Rivers University, Australia; The National Centre for Social and Economic Modelling, University of Canberra, Australia

Volume 4(3) Winter 2011

Cite as: D. Schofield, R. Shrestha, M. Passey, S. Fletcher, S. Kelly, R. Percival; 2011; Projecting the impacts of illness on labour force participation: An application of Health&WealthMOD; International Journal of Microsimulation; 4(3); 37–47. doi: 10.34196/ijm.00059

Abstract

Health&WealthMOD is the first Australian microsimulation model designed to determine the economic impacts of disease on older workers, aged 45 to 65 years. Chronic health conditions are known to be associated with early retirement. This paper describes an application of Health&WealthMOD to estimate the impact of this association on projected labour force participation to 2020 given the ageing population and long-term trend in chronic conditions. Due to ageing and disease trends, the number of people with chronic conditions in the 45–64 years age group was expected to rise to about 4.8 million by 2020, an increase of 82% from the 2003 population of the same age group. About 904,000 persons in the 45–64 age group were projected to be out of the labour force due to ill health in 2020, when only the ageing and population growth were considered. When trends in illness were captured, the figure was increased to about 1.2 million persons. This demonstrates that health is a major driver of labour force participation and retirement and that economic policies alone, with no consideration of health interventions to treat or prevent chronic illness, will only have a limited impact on labour force participation. Thus, it is important that the government focuses on both health policies and economic policies in order to make sure that there will be an adequate supply of labour force in future.

This article contains 3 figures and 6 tables.

Figures

Figure 1. Number of people with chronic health conditions, 2003–2020.
Figure 2. Number of people out of the labour force due to chronic health conditions.
Figure 3. Number of people aged 45–64 years out of the workforce due to chronic health conditions – base and sensitivity projections, Australia 2003–2020.

Tables

Table 1. Persons aged 45–64 years as percentage of working aged population aged 15–64 years by age group and sex.
Sex Age group 2003 2010 2020 2030 2040
Females 45–49 11% 11% 11% 11% 11%
50–54 10% 10% 10% 10% 11%
55–59 9% 9% 10% 11% 11%
60–64 6% 9% 10% 10% 10%
Males 45–49 10% 11% 10% 11% 11%
50–54 10% 10% 10% 10% 11%
55–59 9% 9% 10% 10% 10%
60–64 7% 9% 9% 10% 10%
Total persons 45–64 35% 39% 40% 41% 42%

Source: ABS population projections (Australian Bureau of Statistics, 2005)

Table 2. Number of people aged 45–64 with chronic health conditions by age and sex, Australia, 2003–2020.
2003 2010 2015 2020
Females 45–49 320,282 430,361 477,372 561,247
50–54 346,969 459,330 539,280 583,131
55–59 378,388 505,277 597,730 681,067
60–64 316,535 518,663 611,101 721,683
Total 1,362,174 1,913,632 2,225,484 2,547,128
Males 45–49 305,861 395,265 427,639 491,147
50–54 335,623 429,556 501,052 536,411
55–59 355,338 455,978 540,327 621,625
60–64 323,627 510,775 581,872 683,922
Total 1,320,450 1,791,575 2,050,891 2,333,105
Persons 45–49 626,143 825,626 905,012 1,052,394
50–54 682,592 888,886 1,040,333 1,119,543
55–59 733,726 961,256 1,138,058 1,302,692
60–64 640,162 1,029,439 1,192,973 1,405,605
Total 2,682,623 3,705,207 4,276,375 4,880,233
Table 3. Percentage of persons aged 45–64 with chronic health conditions by age and sex, Australia, 2003–2020.
2003 2010 2015 2020
Females 45–49 45% 55% 63% 70%
50–54 53% 63% 69% 76%
55–59 66% 75% 82% 88%
60–64 74% 84% 92% 99%
Total 58% 68% 76% 83%
Males 45–49 44% 51% 57% 62%
50–54 51% 60% 65% 71%
55–59 61% 69% 76% 82%
60–64 74% 83% 90% 97%
Total 56% 65% 71% 77%
Persons 45–49 45% 53% 60% 66%
50–54 52% 61% 67% 74%
55–59 64% 72% 79% 85%
60–64 74% 84% 91% 98%
Total 57% 67% 73% 80%
Table 4. Number of persons aged 45–64 years out of the labour force due to chronic health conditions by age and sex, Australia, 2003–2020.
2003 2010 2015 2020
Females 45–49 49,017 66,064 73,396 86,399
50–54 71,680 96,367 114,080 124,187
55–59 109,338 146,996 174,574 199,578
60–64 116,261 192,569 228,286 270,994
Total 346,297 501,996 590,336 681,158
Males 45–49 49,109 66,467 73,719 86,393
50–54 55,075 72,278 85,482 92,565
55–59 88,041 114,448 136,624 158,164
60–64 115,902 183,091 208,687 245,398
Total 308,126 436,285 504,512 582,521
Persons 45–49 98,126 132,532 147,115 172,792
50–54 126,755 168,645 199,561 216,752
55–59 197,379 261,445 311,199 357,742
60–64 232,163 375,660 436,973 516,393
Total 654,423 938,281 1,094,848 1,263,679
Table 5. Percentage of persons aged 45–64 years out of the labour force due to chronic health conditions, by age and sex, Australia, 2003–2020.
2003 2010 2015 2020
Females 45–49 7% 9% 10% 11%
50–54 11% 13% 15% 16%
55–59 19% 22% 24% 26%
60–64 27% 31% 34% 37%
Total 15% 18% 20% 22%
Males 45–49 7% 9% 10% 11%
50–54 8% 10% 11% 12%
55–59 15% 17% 19% 21%
60–64 26% 30% 32% 35%
Total 13% 16% 17% 19%
Persons 45–49 7% 9% 10% 11%
50–54 10% 12% 13% 14%
55–59 17% 20% 21% 23%
60–64 27% 31% 33% 36%
Total 14% 17% 19% 21%
Table 6. Sensitivity analysis of number of people out of the labour force due to chronic health conditions.
Base projection High pop growth Low pop growth Disease growth *0.5 Disease growth *1.5
2003 2020 2003 2020 2003 2020 2003 2020 2003 2020
Females 45–49 49,017 86,399 49,048 88,756 48,970 83,752 49,017 71,143 49,017 101,654
50–54 71,680 124,187 71,718 126,657 71,624 121,441 71,680 103,680 71,680 144,693
55–59 109,338 199,578 109,386 202,280 109,271 196,512 109,338 173,959 109,338 225,196
60–64 116,261 270,994 116,309 273,598 116,194 267,888 116,261 233,856 116,261 308,133
Total 346,297 681,158 346,461 691,290 346,059 669,594 346,297 582,639 346,297 779,676
Males 45–49 49,109 86,393 49,149 89,061 49,049 83,406 49,109 71,314 49,109 101,473
50–54 55,075 92,565 55,112 94,757 55,022 90,093 55,075 78,108 55,075 107,023
55–59 88,041 158,164 88,086 160,679 87,976 155,141 88,041 136,534 88,041 179,794
60–64 115,902 245,398 115,950 247,858 115,832 241,897 115,902 215,733 115,902 275,063
Total 308,126 582,521 308,296 592,355 307,879 570,537 308,126 501,689 308,126 663,353
Persons 45–49 98,126 172,792 98,197 177,816 98,019 167,158 98,126 142,457 98,126 203,127
50–54 126,755 216,752 126,830 221,414 126,646 211,534 126,755 181,788 126,755 251,716
55–59 197,379 357,742 197,472 362,959 197,247 351,653 197,379 310,493 197,379 404,990
60–64 232,163 516,393 232,259 521,456 232,026 509,786 232,163 449,590 232,163 583,195
Total 654,423 1,263,679 654,757 1,283,645 653,938 1,240,131 654,423 1,084,328 654,423 1,443,029