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

Loading...
Thumbnail Image
Files in English
English PDF (310.54 KB)
722 downloads
English Text (103.87 KB)
163 downloads
Date
2006-04-11
ISSN
Published
2006-04-11
Author(s)
Bell, Clive
Gersbach, Hans
Abstract
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).
Link to Data Set
Citation
Bell, Clive; Devarajan, Shantayanan; Gersbach, Hans. 2006. The Long-Run Economic Costs of AIDS : A Model with an Application to South Africa. World Bank Economic Review. © Published by Oxford University Press on behalf of the World Bank. http://hdl.handle.net/10986/16464 License: CC BY-NC-ND 3.0 IGO.
Report Series
Other publications in this report series
Journal
Journal
World Bank Economic Review
1564-698X
Journal Volume
Collections
Associated URLs
Associated content
Citations