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The Long-run Effects of HIV/AIDS in Kenya

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  • Bruhns, Ramona

Abstract

This essay analyzes the long-run economic effects of HIV/AIDS in Kenya, with emphasis on fertility, education and child labor. Human capital, which is built up through formal education and parental child-rearing, is the only input in production. Two aspects are central to the analysis: First, a mature AIDS epidemic causes massive premature adult mortality, thereby destroying existing human capital and reducing the labor force on a large scale. Second, the transmission of human capital to future generations is weakened, as children are left orphaned and surviving adults are correspondingly burdened. As a consequence, per capita income decreases and communities can less afford to raise and educate children as they did before the outbreak of the disease. The underlying theoretical model, in which it is assumed that parents raise and educate children for both financial and altruistic reasons, is calibrated using data for the period 1920 to 2000. The long-run effects of the disease, which depend heavily on parents' expectations about future mortality rates, are estimated for the years 2000-2040. Both human capital and per capita income grow significantly more slowly after the outbreak of the epidemic, while the incidence of child labor doubles for some periods. The level of fertility falls in the immediate aftermath of the outbreak, but can be significantly higher when the epidemic has reached a mature phase, depending on parents' expectations. Governmental interventions in the health sector in the early phase of the epidemic can strongly mitigate its adverse effects.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 952.

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Date of creation: 28 Nov 2006
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Handle: RePEc:pra:mprapa:952

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Keywords: child labor; growth; fertility; health; epidemic; HIV/AIDS; Kenya;

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References

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  1. 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.
  2. Ferreira, Pedro Cavalcanti Gomes & Pessoa, Samuel de Abreu, 2003. "The Long Run Economic Impact of AIDS," Economics Working Papers (Ensaios Economicos da EPGE) 475, FGV/EPGE Escola Brasileira de Economia e Finan├žas, Getulio Vargas Foundation (Brazil).
  3. Corrigan, Paul & Glomm, Gerhard & Mendez, Fabio, 2005. "AIDS crisis and growth," Journal of Development Economics, Elsevier, vol. 77(1), pages 107-124, June.
  4. Evenson, R.E. & Mwabu, G., 1995. "Household Composition and Expenditures on Human Capital Formation in Kenya," Papers 731, Yale - Economic Growth Center.
  5. Shankha Chakraborty & Mausumi Das, 2003. "Mortality, Fertility and Child Labor," University of Oregon Economics Department Working Papers 2003-35, University of Oregon Economics Department, revised 01 Dec 2003.
  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. Clive Bell & Shantayanan Devarajan & Hans Gersbach, 2003. "The long-run economic costs of AIDS : theory and an application to South Africa," Policy Research Working Paper Series 3152, The World Bank.
  8. Hoddinott, John, 1992. "Rotten Kids or Manipulative Parents: Are Children Old Age Security in Western Kenya?," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 545-65, April.
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Cited by:
  1. Clive Bell & Hans Gersbach, 2006. "Growth and Enduring Epidemic Diseases," CESifo Working Paper Series 1729, CESifo Group Munich.

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