HIV/AIDS and Poverty in South Africa : A Bayesian Estimation
In this paper we estimate the causal impact of HIV/AIDS on monetary poverty. Using a paneldatabase from South Africa, we model the consequences of illness on both labor income andtransfers. We treat endogeneity and selection problems associated to HIV/AIDS through using aselection model that includes correlated fixed-effects both in the level and the participationequations, which are estimated simultaneously via original Bayesian methods. While no significantimpact of HIV/AIDS on household labor income is found due to households recomposition, asignificant and asymmetric impact on income transfers emerges. For urban populations, we find thatHIV/AIDS has a positive impact on the probability of receiving social and private transfers, servingto marginally reduce poverty, while for rural populations, HIV/AIDS causes a substantial fall inreceived transfers and dramatically increases chronic poverty.
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