Diabetes and weight-loss medications may have economic effects beyond healthcare spending, according to new research from NYU Abu Dhabi. Using population-wide data from Denmark, the study found that diabetes treatment caused an increased likelihood of employment, while weight-management treatment caused longer working hours among people already employed. The findings also point to implications for income tax revenue and public healthcare spending.
The study examines semaglutide, a medication sold under brand names including Ozempic, used to treat Type 2 diabetes, and Wegovy, used for weight management. Both belong to a class of drugs known as GLP-1 receptor agonists, which mimic a natural hormone involved in regulating blood sugar and appetite.
To examine these effects, the researchers analyzed population-wide Danish records from 2018 to 2024, tracking employment, working hours and earnings around the time people began treatment. They compared changes over time using statistical methods designed to help distinguish treatment-related effects from wider trends in the labor market.
Among people receiving subsidized Ozempic treatment for diabetes, treatment generated a 4.1 percentage-point increase in the probability of employment and an increase of 19.5 hours in total working hours per quarter. Among people paying out of pocket for Wegovy for weight management, treatment was not associated with a significant change in the likelihood of entering employment, but those already employed worked an additional 29.7 hours per quarter.
"These findings highlight the importance of looking beyond the direct costs of medication when examining its wider economic effects," said Assistant Professor of Economics Veda Narasimhan at NYU Abu Dhabi. "By examining employment and working hours separately, we can better understand how outcomes differ between treatment groups and the potential implications for individuals and public finances."
The researchers also examined how changes in employment and working hours could affect public finances. In Denmark, diabetes treatment is subsidized, while patients using Wegovy for weight management pay the full cost themselves. The study's fiscal analysis estimates that additional income tax revenue associated with increased labor income among people using Ozempic and Wegovy could help offset public spending on subsidized diabetes treatment under Denmark's healthcare and tax arrangements.
"Evaluating healthcare treatments purely through clinical metrics like weight loss or blood sugar levels misses the bigger picture. We need to look beyond direct medical costs," said Raül Santaeulàlia-Llopis, Associate Professor of Economics at NYU Abu Dhabi. "Our research shows that when you account for changes in employment, working hours, and the resulting tax revenues, the fiscal calculus changes entirely. However, a complete analysis must also look at how these drugs impact lifestyle choices like diet and exercise. This raises a fundamental question: Is GLP-1 a catalyst for a healthier, self-sustaining lifestyle, or do its economic dividends just create a new form of pharmaceutical dependency? Our work with the Abu Dhabi Department of Health on the Thiqa obesity program aims to find out."
Published as a discussion paper by the Centre for Economic Policy Research (CEPR), the study provides evidence from Denmark on the relationship between semaglutide treatment and labor market outcomes. By examining diabetes and weight-management treatment separately, the researchers highlight how outcomes can differ across patient groups and payment arrangements.
