The effects of chronic non-communicable diseases on labour force outcomes: Quasi experimental evidence from Sri Lanka

We investigate the effects of experiencing non-communicable diseases (NCDs) on labour force outcomes of working-age individuals and their households in Sri Lanka. For this, quasi-experimental evidence, including average treatment effects on those treated (ATT), are generated by using the self-reported health survey of the labour force of Sri Lanka. According to the analysis, individuals with at least one NCD account for approximately 19.15% of the working-age population. On average, employment probability, labour supply, and labour earnings of them are significantly lower than those of non-NCD individuals by 9.5% (ATT=−0.102, P < 0.001), 44.6% (ATT=−0.590, P < 0.001), and 47.9% (ATT=−0.652, P < 0.001), respectively. The negative impacts on labour force outcomes are notably larger in the cases of paralysis and mental illness. These NCDs reduce individual labour supply by more than 80% and labour earnings by more than 90%. The employment probability of individuals with paralysis and mental illnesses is also relatively lower by more than 60%. Apart from these individual-level effects, the paper provides evidence on how labour force outcomes at the household level are influenced by NCDs. Our findings demonstrate that the association between individuals' NCD-prevalence and labour force outcomes is relatively stronger for males, informal sector employees, and elderly people. The results suggest several social inclusion policies.