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The social economic impact of AIDS: Accounting for intergenerational transmission, productivity and fertility

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  • Chrysovalantis VASILAKIS

    ()
    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

In this paper we develop a model that aims to investigate the economic and demographic impacts of three effects of the HIV-AIDS epidemic in developing countries. The direct effect of the HIV epidemic is that it hits the inherited characteristics of young adults. The two indirect effects, resulting from the first, are the reduction in productivity of adults and the transmission of the disease to their offsprings. We allow these different effects to act either separately or together, and we investigate the marginal efficiency of health expenditures on the survival probability of individuals and demographics. The direct effect of the HIV virus is that it leads adults to increase their own health expenditure and to decrease that of their children. On the contrary, the transmission effect of the HIV virus leads parents to spend more on their children than on their own. We show that the reduction in productivity of young adults decreases health expenditures for themselves and their children. Furthermore, we find that the productivity effect dominates by large the two others. Moreover, when adults decide to have fewer children because of HIV, we show that the ratio of low to high skilled workers increases. This demographic impact impoverishes the economy in the short and medium run.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2010046.

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Length: 44
Date of creation: 21 Dec 2010
Date of revision:
Handle: RePEc:ctl:louvir:2010046

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Keywords: orphans; epidemic; transmission; productivity shock; survival rate;

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  1. Robert J. Barro & Gary S. Becker, . "Fertility Choice in a Model of Economic Growth," University of Chicago - Population Research Center 88-8, Chicago - Population Research Center.
  2. Anne Case & Christina Paxson & Joseph Ableidinger, 2004. "Orphans in Africa: Parental Death, Poverty and School Enrollment," Working Papers 256, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  3. Cuddington, John T. & Hancock, John D. & Rogers, Carol Ann, 1994. "A dynamic aggregative model of the AIDS epidemic with possible policy interventions," Journal of Policy Modeling, Elsevier, vol. 16(5), pages 473-496, October.
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  5. BOUCEKKINE, Raouf & DESBORDES, Rodolphe & LATZER, Hélène, 2008. "How do epidemics induce behavioral changes?," CORE Discussion Papers 2008042, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Alwyn Young, 2005. "The Gift of the Dying: The Tragedy of Aids and the Welfare of Future African Generations," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 423-466, May.
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  8. de Walque, Damien, 2007. "How does the impact of an HIV/AIDS information campaign vary with educational attainment? Evidence from rural Uganda," Journal of Development Economics, Elsevier, vol. 84(2), pages 686-714, November.
  9. Galor, Oded & Moav, Omer, 2001. "Natural Selection and the Origin of Economic Growth," CEPR Discussion Papers 2727, C.E.P.R. Discussion Papers.
  10. Clive Bell & Hans Gersbach, 2006. "Growth and Enduring Epidemic Diseases," CER-ETH Economics working paper series 06/57, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  11. Channing Arndt & Jeffrey D. Lewis, 2001. "The HIV|AIDS pandemic in South Africa: sectoral impacts and unemployment," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(4), pages 427-449.
  12. Alwyn Young, 2007. "In sorrow to bring forth children: fertility amidst the plague of HIV," Journal of Economic Growth, Springer, vol. 12(4), pages 283-327, December.
  13. Sebnem Kalemli-Ozcan, 2006. "AIDS, "Reversal" of the Demographic Transition and Economic Development: Evidence from Africa," NBER Working Papers 12181, National Bureau of Economic Research, Inc.
  14. Shankha Chakraborty & Mausumi Das, 2003. "Mortality, Human Capital and Persistent Inequality," Working papers 119, Centre for Development Economics, Delhi School of Economics.
  15. Corrigan, Paul & Glomm, Gerhard & Mendez, Fabio, 2005. "AIDS crisis and growth," Journal of Development Economics, Elsevier, vol. 77(1), pages 107-124, June.
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