Diabetes and the Labor Market The community-wide economic cost in the Lower Rio Grande Valley H. SHELTON BROWN, III, PHD 1 JOSELITA K. ESTRADA, PHD 2 GAUTAM HAZARIKA, PHD 3 ELENA BASTIDA, PHD 4 E conomic analyses of diabetes and di- abetes treatment and prevention are increasingly common (1–11). The cost of illness studies divide costs into di- rect and indirect components (12,13). In- direct costs are typically those associated with limited employment-related pro- ductivity (14 –18). Direct costs usually in- clude hospital and other medical costs (19 –25). While these approaches have merit at the national level, they are less applicable at the community level for two reasons. First, lost income due to di- abetes translates into substantially re- duced local spending for everyone in communities where the prevalence of diabetes is high. For example, in a com- munity with high diabetes-related unem- ployment, income reductions related to diabetes translate into less local spending, leading to layoffs and reduced expendi- tures. Second, the economy of the local community partially benefits from medi- cal expenditures, which are largely in- flows from outside the community but spent locally. In this study, we use an al- ternative method to assess the local eco- nomic impact of diabetes: input-output analysis. We focus on a largely Mexican- American community with a 25% type 2 diabetes prevalence rate, the Lower Rio Grande Valley (LRGV) of South Texas (26). We intend to show that the standard practice of including local medical care costs is not necessary to highlight the high cost of diabetes. Further, we will demon- strate that labor productivity losses asso- ciated with diabetes adversely affect income prospects of the wider commu- nity. RESEARCH DESIGN AND METHODS — There have been sev- eral diabetes and labor productivity stud- ies in economics literature (14 –18). Two of these were conducted in the LRGV, partly due to the area’s high diabetes prev- alence (14,18). These studies used data from the Border Epidemiologic Study on Aging (BESA), a population-based survey of Mexican Americans aged 45 years re- siding in the LRGV. BESA includes exten- sive socioeconomic, demographic, and health information on a sample of 1,089 respondents. First, we use wage equations from Bastida and Paga ´n (14). After con- trolling for human capital and other con- founders such as acculturation, Bastida and Paga ´n show that women with diabe- tes earn $3,584.53 less than women with- out diabetes, whereas men with diabetes earn $1,584.66 less than men without di- abetes. Second, we use work propensity equations from Brown et al.(18). In their first model, Brown et al. show that males and females with diabetes were 7.5 per- centage points less likely to work than males and females without diabetes. In their second model, men with diabetes were 10.5 percentage points less likely to work than men without diabetes, whereas there were no diabetes-related differences for women (18). Regional input-output models are based on the standard model used in mac- roeconomic analysis intended for national accounts. More detailed explana- tions of input-output analysis exist else- where (27). Input-output analysis allows for an examination of the economic rela- tionships between consumer expendi- tures and businesses within a given area. It captures the flow of dollars from pur- chasers to producers using interindustry transaction information. Individual industry production functions, or mathe- matical equations modeling the conver- sion of inputs from various sectors to outputs in other sectors, describe how many resources are used in each industry and how each industry relates to other industries. There are three types of effects that are estimated with input-output models: direct, indirect, and induced. In our case, direct effects are the loss of income due to diabetes. Indirect effects are the resulting changes in interindustry purchases. Fi- nally, induced effects are changes in inter- industry purchases resulting from households spending their income gener- ated from direct and indirect effects. This study uses an input-output model for the four counties that comprise the LRGV (Cameron, Hidalgo, Starr, and Willacy) (28). The LRGV has a per capita income ranging from $7,069 in Starr County to $10,960 in Hidalgo County and a population of 978,369 (29). We estimate income loss due to dia- betes as follows. First, we estimate the number of people with diabetes by mul- tiplying the number of Latinos (almost all are Mexican American) in the LRGV 45 years of age (29) by the sex-specific dia- betes prevalence for Mexican Americans 45 years of age (26). Then, we estimate the number of unemployed adults with diabetes, by sex, from BESA. Finally, we aggregate the wage differential for em- ployed adults with diabetes, by sex (14,18). RESULTS — The results are shown in Table 1. The first column shows estimates of labor costs based on the working pro- pensity equation, model 1, estimated in Brown et al. (18). The second column shows estimates of labor costs based on the working propensity equation, model 2, estimated in Brown et al. (18). In model 2, a technique known in econometrics as instrumental variables is used. The third column includes the wage equation, model 3, from Bastida and Paga ´n (14). Finally, the fourth column combines the ●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● From the 1 Division of Management Policy and Community Health, University of Texas School of Public Health, Brownsville, Texas; the 2 Department of Economics, Texas A & M University at Galveston, Maritime Administration, Galveston, Texas; the 3 Department of Economics, University of Texas at Brownsville, Brownsville, Texas; and the 4 Department of Sociology and Center on Aging and Health, University of Texas-Pan American, Edinburg, Texas. Address correspondence and reprint requests to H. Shelton Brown, III, PhD, UT-SPH, School of Public Health Building, 80 Fort Brown, Brownsville, TX 78520. E-mail: shelton.brown@utb.edu. Received for publication 2 June 2005 and accepted in revised form 2 September 2005. Abbreviations: BESA, Border Epidemiologic Study on Aging; LRGV, Lower Rio Grande Valley. © 2005 by the American Diabetes Association. The costs of publication of this article were defrayed in part by the payment of page charges. This article must therefore be hereby marked “advertisement” in accordance with 18 U.S.C. Section 1734 solely to indicate this fact. Epidemiology/Health Services/Psychosocial Research B R I E F R E P O R T DIABETES CARE, VOLUME 28, NUMBER 12, DECEMBER 2005 2945