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The Impact of AIDS on Income and Human Capital

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Author Info
Ferreira, Pedro Cavalcanti Gomes
Santos, Marcelo Rodrigues dos
Pessoa, Samuel de Abreu

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Abstract

This paper studies the impact of HIV/AIDS on per capita income and education. It ex-plores two channels from HIV/AIDS to income that have not been sufficiently stressed bythe literature: the reduction of the incentives to study due to shorter expected longevity andthe reduction of productivity of experienced workers. In the model individuals live for threeperiods, may get infected in the second period and with some probability die of Aids beforereaching the third period of their life. Parents care for the welfare of the future generationsso that they will maximize lifetime utility of their dynasty. The simulations predict that themost affected countries in Sub-Saharan Africa will be in the future, on average, thirty percentpoorer than they would be without AIDS. Schooling will decline in some cases by forty percent.These gures are dramatically reduced with widespread medical treatment, as it increases thesurvival probability and productivity of infected individuals.

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Paper provided by Graduate School of Economics, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 690.

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Date of creation: 12 Feb 2009
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Handle: RePEc:fgv:epgewp:690

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  1. Markus Haacker, 2002. "The Economic Consequences of HIV/AIDS in Southern Africa," IMF Working Papers 02/38, International Monetary Fund. [Downloadable!]
  2. Kalemli-Ozcan, Sebnem & Ryder, Harl E. & Weil, David N., 2000. "Mortality decline, human capital investment, and economic growth," Journal of Development Economics, Elsevier, vol. 62(1), pages 1-23, June. [Downloadable!] (restricted)
  3. Bigsten, Arne, et al, 2000. "Rates of Return on Physical and Human Capital in Africa's Manufacturing Sector," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 801-27, July.
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  4. Ferreira, Pedro Cavalcanti Gomes & Pessoa, Samuel de Abreu, 2003. "The Costs of Education, Longevity and the Poverty of Nations," Economics Working Papers (Ensaios Economicos da EPGE) 472, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  5. Rodrigo Soares, 2006. "The effect of longevity on schooling and fertility: evidence from the Brazilian Demographic and Health Survey," Journal of Population Economics, Springer, vol. 19(1), pages 71-97, February. [Downloadable!] (restricted)
  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.
  7. Rodrigo R. Soares, 2005. "Mortality Reductions, Educational Attainment, and Fertility Choice," American Economic Review, American Economic Association, vol. 95(3), pages 580-601, June. [Downloadable!]
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  8. Corrigan, Paul & Glomm, Gerhard & Mendez, Fabio, 2005. "AIDS crisis and growth," Journal of Development Economics, Elsevier, vol. 77(1), pages 107-124, June. [Downloadable!] (restricted)
  9. Bloom, David E. & Mahal, Ajay S., 1997. "Does the AIDS epidemic threaten economic growth?," Journal of Econometrics, Elsevier, vol. 77(1), pages 105-124, March. [Downloadable!] (restricted)
  10. Clive Bell & Shantayanan Devarajan & Hans Gersbach, 2006. "The Long-Run Economic Costs of aids: A Model with an Application to South Africa," World Bank Economic Review, Oxford University Press, vol. 20(1), pages 55-89.
  11. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
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  12. Cuddington, John T. & Hancock, John D., 1994. "Assessing the impact of AIDS on the growth path of the Malawian economy," Journal of Development Economics, Elsevier, vol. 43(2), pages 363-368, April. [Downloadable!] (restricted)
  13. Trostel, Philip A, 1993. "The Effect of Taxation on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 327-50, April. [Downloadable!] (restricted)
  14. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2002. "Vintage Human Capital, Demographic Trends, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 104(2), pages 340-375, June. [Downloadable!] (restricted)
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  15. C Arndt & J D Lewis, 2000. "The Macro Implications of HIV/AIDS in South Africa: A Preliminary Assessment," South African Journal of Economics, Economic Society of South Africa, vol. 68(5), pages 380-392, December. [Downloadable!] (restricted)
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