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The Impact Of Aids On Income And Human Capital

  • PEDRO CAVALCANTI FERREIRA
  • SAMUEL PESSÔA
  • MARCELO RODRIGUES DOS SANTOS

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 by the literature: the reduction of the incentives to study due to shorter expected longevity and the reduction of productivity of experienced workers. In the model individuals live for three periods, may get infected in the second period and with some probability die of Aids before reaching the third period of their life. Parents care for the welfare of the future generations so that they will maximize lifetime utility of their dynasty. The simulations predict that the most affected countries in Sub-Saharan Africa will be in the future, on average, thirty percent poorer 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 the survival probability and productivity of infected individuals.

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File URL: http://hdl.handle.net/10.1111/j.1465-7295.2010.00273.x
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Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 49 (2011)
Issue (Month): 4 (October)
Pages: 1104-1116

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Handle: RePEc:bla:ecinqu:v:49:y:2011:i:4:p:1104-1116
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  14. 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, World Bank Group, vol. 20(1), pages 55-89.
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  22. repec:bla:restud:v:77:y:2010:i:4:p:1421-1449 is not listed on IDEAS
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