Open Access Research article

The economic impact of diabetes through lost labour force participation on individuals and government: evidence from a microsimulation model

Deborah Schofield1, Michelle M Cunich2*, Rupendra N Shrestha2, Megan E Passey3, Lennert Veerman4, Emily J Callander2, Simon J Kelly5 and Robert Tanton5

Author Affiliations

1 NHMRC Clinical Trials Centre and School of Public Health, Sydney Medical School, The University of Sydney, Sydney, Australia

2 NHMRC Clinical Trials Centre, Sydney Medical School, The University of Sydney, Sydney, Australia

3 University Centre for Rural Health – North Coast, School of Public Health, University of Sydney, Lismore, NSW, Australia

4 School of Population Health, University of Queensland, Brisbane, Queensland, Australia

5 National Centre for Social and Economic Modelling, University of Canberra, Canberra, ACT, Australia

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BMC Public Health 2014, 14:220  doi:10.1186/1471-2458-14-220

Published: 4 March 2014



Diabetes is a costly and debilitating disease. The aim of the study is to quantify the individual and national costs of diabetes resulting from people retiring early because of this disease, including lost income; lost income taxation, increased government welfare payments; and reductions in GDP.


A purpose-built microsimulation model, Health&WealthMOD2030, was used to estimate the economic costs of early retirement due to diabetes. The study included all Australians aged 45–64 years in 2010 based on Australian Bureau of Statistics’ Surveys of Disability, Ageing and Carers. A multiple regression model was used to identify significant differences in income, government welfare payments and taxation liabilities between people out of the labour force because of their diabetes and those employed full time with no chronic health condition.


The median annual income of people who retired early because of their diabetes was significantly lower (AU$11 784) compared to those employed full time without a chronic health condition who received almost five times more income. At the national level, there was a loss of AU$384 million in individual earnings by those with diabetes, an extra AU$4 million spent in government welfare payments, a loss of AU$56 million in taxation revenue, and a loss of AU$1 324 million in GDP in 2010: all attributable to diabetes through its impact on labour force participation. Sensitivity analysis was used to assess the impact of different diabetes prevalence rates on estimates of lost income, lost income taxation, increased government welfare payments, and reduced GDP.


Individuals bear the cost of lost income in addition to the burden of the disease. The Government endures the impacts of lost productivity and income taxation revenue, as well as spending more in welfare payments. These national costs are in addition to the Government’s direct healthcare costs.

Diabetes; Chronic disease; Labour force participation; Economic costs; Microsimulation modelling; Income; Taxation; Government welfare payments; GDP