An investigation into the effect of type I and type II diabetes duration on employment and wages

•This paper examines the effect of type I and type II diabetes on employment and wage rates.•Type II diabetics do not receive a uniform penalty; the impact changes over the disease.•Type II diabetes duration reduces both male and female employment rates.•Type II diabetes duration reduces a male's wages.•Omitted variable bias and heterogeneity are accounted for.

Using data from the National Longitudinal Survey of Youth 1979, the current study examines the effect of type I and type II diabetes on employment status and wages. The results suggest that both the probability of employment and wages are negatively related to the number of years since the initial diagnosis of diabetes. Moreover, the effect of diabetes duration on the probability of employment appears to be nonlinear, peaking around 16 years for females and 10 years for males. A similar negative effect on wages is found only in male diabetics. Finally, the results suggest that failure to distinguish between type I and type II diabetics may lead to some counterintuitive results.