Estimated and Likely Impact of NCDs on Human Capital in Saudi Arabia | 85
FIGURE 5.4
NCDs and human capital: Transmission mechanisms NCDs
Direct impact
Early retirement
Productivity loss
Absenteeism
Indirect impact
Academic achievement and Intergenerational loss in education educational investment by attainment diverting resources toward disease Presenteeism treatment
Lower investment in human capital and labor market participation by doing unpaid work caring for the chronically ill
Source: Original figure for this publication. Note: NCDs = noncommunicable diseases.
The following section discusses the global evidence on each of the direct and indirect pathways in greater detail.
Direct impact on human capital Most commonly, the literature shows NCDs to have a direct impact on human capital, both in the short and in the longer terms. The literature, for example, suggests that chronic conditions reduce the supply of labor in the short term through mortality, early retirement (Dwyer and Mitchell 1999; Jones, Rice, and Roberts 2010; Lindeboom and Kerkhofs 2009), and reduced productivity, either through absenteeism or presenteeism (Jäckle and Himmler 2010; LópezCasasnovas, Rivera, and Currais 2005). Absenteeism implies that people with a chronic illness are absent more from work than those who are healthy, while presenteeism suggests that people with a chronic illness (or poor health) are at work but are not as productive as people in good health. In addition, the literature points to the longer-term impact of NCDs on human capital, mainly effectuated through school performance (for example, attendance, school outcomes). This section begins by presenting the evidence for the short-term impacts (retirement, absenteeism, presenteeism, productivity), followed by the longer-term direct impact (educational attainment). Early retirement
Robust evidence, particularly from high-income countries, establishes a link between health status and early retirement. Most of the literature on this front has focused on disentangling the methodological aspects of the self-rated health-retirement nexus (for example, people who are not happy with their job might exaggerate their self-rated health status). The assumption here is that selfrated health is also a proxy for NCDs. For example, an early analysis by Chirikos and Nestel (1984) compares the labor supply effects of a self-reported disability measure to that of a more objective impairment index and concludes that self- reported health problems exaggerate the impact of poor health on work potential. Similarly, a study by Anderson and Burkhauser (1985) uses early mortality to
