This study represents a new way of looking at health, by investigating of the effect of aggregate cancer incidence rates on labour productivity, using a Macroeconomic methodology. The health of the labour force is a key determinant of labour productivity, with poor health comes both physical and mental stresses that corrode the productive capacity of workers. Many existing studies, of a similar nature, are limited in their approach by using life expectancy as a health indicator. Within this study, cancer has been selected as the approximation of labour force health, given its ability to capture a range of lifestyle choices. Workers that are afflicted by cancer often face three choices: continue working, temporarily/permanently leave employment or retire early – all these outcomes result in a loss of productivity. Moreover, the effect on productivity may not just be felt by the patient but also their family unit. This potentially creates a negative externality, the result of which is additional productivity loss. The objectives of this study are to: determine the effect of cancer rates on labour productivity, to quantify this, and to offer policy recommendations aimed at relieving contractionary pressures on productivity.
The study used an autoregressive distributed lag (ARDL) model to assess the impact of cancer rates in the short-run and long-run. The results of this study were clear, with cancer incidence rates having a significant short-run one year lagged effect on labour productivity. With a 10% short-run lagged increase in cancer rates, leading to a loss of -$1711 in labour productivity per worker – using 2010 GDP per worker. In the long-run, the effect of cancer rates appears to be positive suggesting that cancer does not impact long-run economic growth trends. This research offers a new insight into the mechanics of health within the environment of macroeconomics. With this study potentially unlocking a new avenue of productivity policy framework, aimed at health improvement rather than more traditional approaches such as training and technological advancement.
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