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reported poor health and two interaction terms for self reported poor health and each disease in the univariate participation equations. Table 6 shows the effect of poor health on labour force participation for those with diabetes or cardiovascular disease. The reduction in the probability of being in the labour force associated with having diabetes and being sick compared to having diabetes but not reporting being in poor health, was significant for men ( 0.17; 95%CI 0.07, 0.26) but not significant for women (0.08; 95%CI -0.06, 0.21). The reduction in the probability of labour force participation associated with having cardiovascular disease and being sick compared to having cardiovascular disease but not reporting being sick was high and significant for men (0.35; 95%CI 0.21, 0.48) but small and insignificant for women (0.03; 95%CI -0.23, 0.29). It seems clear that the morbidity associated with cardiovascular disease or diabetes has a strong effect on labour force participation at least for men. While some men may retire following a cardiac event or on being diagnosed with diabetes for most it is the complications associated with the disease that leads to a change in behaviour. The implication is that primary prevention of cardiovascular disease and diabetes will improve labour market outcomes but secondary prevention and treatment if it can reduce the complications of the disease could have a very significant impact on labour supply.

CVD=1, Sick=0

CVD=1, Sick =1

Diabetes=1, Sick =0

Diabetes=1, Sick =1

Participation rate

0.800

0.453

0.778

0.613

Difference

-0.346 (-0.213; -0.480)

-0.165 (-0.073, -0.257)

Participation rate

0.507

0.478

0.405

0.327

Difference

-0.029 (0.233, -0.290)

-0.077 (0.059, -0.214)

Table 6. Effect of chronic disease and poor health on predicted participation rate by gender

Males

Females

CVD=Cardiovascular disease

In the context of concerns about the size of the labour force into the future the potential for improved labour outcomes from chronic disease prevention and treatment are significant. For example a report to the Government of Victoria estimated that the negative impact of population ageing in the next 40 years would lead to a decline in labour force participation in Victoria from around 64.7 per cent in 2005 to 55.6 per cent by 2035 (Victoria's Workforce Participation Taskforce 2005). To maintain the size of the workforce they estimate that participation rates in 2035 would have to be 15 per cent higher across all age groups than they were in 2005. The present study confirms that the prevalence of risk factors for cardiovascular and diabetes in the Australian population over the age of 25 years has a significant impact on labour market outcomes. The combined size of the effect of these two chronic diseases on reduced labour force participation was 0.22 for men and at least 0.124 for women from diabetes alone. We found that, particularly for men with cardiovascular disease or diabetes, being sick had a large effect on labour force participation. This means that eliminating the risk of disease at the population level could increase the effective labour force by into the future by more than 1.2% for men and 0.08% for women. Reducing the morbidity associated with the complications of these chronic diseases, through secondary prevention and effective treatment, would have an effect not only labour

6.

Conclusion

Chronic disease and labour force participation in Australia: an endogenous multivariate probit analysis of clinical prevalence data

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