The Impact of Changes in Health Status: An Economywide Analysis for Australia

George Verikios, Peter Dixon, Maureen Rimmer and Anthony Harris

Centre of Policy Studies/IMPACT Centre Working Papers from Victoria University, Centre of Policy Studies/IMPACT Centre

Abstract: We construct a dynamic, computable general equilibrium model of the Australian economy that incorporates a detailed representation of demographic and health trends of the labour force. We project the economywide effects of changes in the health status of the workforce associated with a change in chronic disease prevalence. Our results show that reductions in chronic disease and the associated rate of health decline of older workers have a much greater effect than similar reductions for younger workers. Traded sectors benefit much more than nontraded sectors, with a consequent improvement in the trade balance and a real depreciation of the exchange rate. The increase in workforce participation also decreases the capital-labour ratio and raises the returns to capital relative to labour.

Keywords: chronic disease; computable general equilibrium; health status; labour supply (search for similar items in EconPapers)
JEL-codes: C68 I15 J11 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-age, nep-cmp and nep-hea
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