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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.

Suggested Citation

  • Bruhns, Ramona, 2006. "The Long-run Effects of HIV/AIDS in Kenya," MPRA Paper 952, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:952
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    File URL: https://mpra.ub.uni-muenchen.de/952/1/MPRA_paper_952.pdf
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    References listed on IDEAS

    as
    1. Chakraborty, Shankha & Das, Mausumi, 2005. "Mortality, fertility, and child labor," Economics Letters, Elsevier, vol. 86(2), pages 273-278, February.
    2. Ferreira, Pedro Cavalcanti & Pessôa, Samuel de Abreu, 2003. "The long run economic impact of AIDS," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 475, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    3. 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.
    4. Alwyn Young, 2005. "The Gift of the Dying: The Tragedy of AIDS and the Welfare of Future African Generations," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 423-466.
    5. Evenson, R.E. & Mwabu, G., 1995. "Household Composition and Expenditures on Human Capital Formation in Kenya," Papers 731, Yale - Economic Growth Center.
    6. 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 545-565, April.
    7. Corrigan, Paul & Glomm, Gerhard & Mendez, Fabio, 2005. "AIDS crisis and growth," Journal of Development Economics, Elsevier, vol. 77(1), pages 107-124, June.
    8. 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.
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    Cited by:

    1. Bell, Clive & Gersbach, Hans, 2013. "Growth and enduring epidemic diseases," Journal of Economic Dynamics and Control, Elsevier, vol. 37(10), pages 2083-2103.

    More about this item

    Keywords

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

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I2 - Health, Education, and Welfare - - Education
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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