The Long-Run Economic Costs of AIDS : A Model with an Application to South Africa

Bell, Clive; Devarajan, Shantayanan; Gersbach, Hans

The Long-Run Economic Costs of AIDS : A Model with an Application to South Africa

Autores

Bell, Clive

Devarajan, Shantayanan

Gersbach, Hans

Editor

Published by Oxford University Press on behalf of the World Bank

Descripción

Primarily a disease of young adults, Acquired Immuno Deficiency Syndrome (AIDS) imposes economic costs that could be devastatingly high in the long run by undermining the transmission of human capital the main driver of long-run economic growth across generations. AIDS makes it harder for victims' children to obtain an education and deprives them of the love, nurturing, and life skills that parents provide. These children will in turn find it difficult to educate their children, and so on. An overlapping generations model is used to show that an otherwise growing economy could decline to a low level subsistence equilibrium if hit with an AIDS type increase in premature adult mortality. Calibrating the model for South Africa, where the HIV prevalence rate is over 20 percent, simulations reveal that the economy could shrink to half its current size in about four generations in the absence of intervention. Programs to combat the disease and to support needy families could avert such a collapse, but they imply a fiscal burden of about 4 percent of Gross domestic product (GDP).

Palabras clave

ACCOUNT, ADVERSE EFFECT, AIDS EPIDEMIC, BENCHMARK, BENCHMARKS, CAPITAL ACCUMULATION, CARE OF ORPHANS, CHANGES IN FERTILITY, CHILD LABOR, CHILD REARING, CHILDREN PER COUPLE, DEPENDENCY RATIO, DESCENT, DEVELOPMENT ECONOMICS, DIMINISHING RETURNS, DISABILITY, DISEASES, DISPOSABLE INCOME, EARLY DEATH, EARNINGS, ECONOMETRICS, ECONOMIC GROWTH, ECONOMIC POLICY, ECONOMIC PRODUCTIVITY, ECONOMIC RESEARCH, ECONOMIC SYSTEM, EDUCATION OF CHILDREN, EDUCATIONAL ATTAINMENT, EPIDEMIC, EXCESS MORTALITY, EXPECTED VALUE, EXPENDITURE, EXPENDITURES, FAMILY INCOME, FAMILY STRUCTURE, FERTILITY, FEWER CHILDREN, FINANCES, FISCAL POLICY, FORMAL EDUCATION, GDP, GDP PER CAPITA, GENERIC DRUGS, GLOBAL AIDS EPIDEMIC, GLOBAL DEVELOPMENT, GROWTH RATE, HEALTH POLICY, HEALTH SERVICES, HIV, HOUSEHOLD LEVEL, HUMAN CAPITAL, HUSBAND, IMPACT OF AIDS, INEQUALITY, INSURANCE, INTERNATIONAL BANK, INVESTMENT IN EDUCATION, INVESTMENTS IN EDUCATION, LABOR FORCE, LABOR SUPPLY, LEVEL OF EDUCATION, LEVEL OF FERTILITY, LEVEL OF MORTALITY, LEVELS OF MORTALITY, LIFE EXPECTANCY, LIFE EXPECTANCY AT BIRTH, LIFE SKILLS, LOWER FERTILITY, MACROECONOMICS, MARGINAL COST, MEDICAL CARE, MORTALITY RISK, MOTHER, MOTHER-TO-CHILD, MOTHER-TO-CHILD TRANSMISSION, NUCLEAR FAMILIES, NUCLEAR FAMILY, NUMBER OF CHILDREN, NUTRITION, OLD AGE, OPPORTUNITY COSTS, OPTIMIZATION, ORPHAN, ORPHANAGES, ORPHANS, OVERLAPPING GENERATIONS MODEL, PARENTAL CARE, PARENTAL DEATH, PER CAPITA INCOME, PHYSICAL CAPITAL, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, PREMATURE ADULT MORTALITY, PREMATURE DEATH, PREVENTIVE MEASURES, PROSTITUTES, PUBLIC FUNDS, PUBLIC GOOD, PUBLIC POLICY, PUBLIC SUPPORT, RATE OF GROWTH, REGRESSION ANALYSIS, RESPECT, SAVINGS, SCHOOL ATTENDANCE, SEXUAL BEHAVIOR, SEXUALLY TRANSMITTED DISEASES, SINGLE PARENTS, SINGLE-PARENT FAMILIES, SINGLE-PARENT HOUSEHOLD, SINGLE-PARENT HOUSEHOLDS, SOCIAL CUSTOMS, SOCIAL SECTORS, TAX BURDEN, TAX REVENUES, TOTAL REVENUE, UNION, UNIVERSAL EDUCATION, USE OF CONDOMS, VICIOUS CYCLE, VICTIMS, WIFE, WILL, YOUNG ADULTS, YOUNG CHILD