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

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World Bank (WB)

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).
Type: Journal Article
Publications & Research :: Journal Article
Publications & Research :: Journal Article
Link: World Bank Economic Review
doi:10.1093/wber/lhj006
http://hdl.handle.net/10986/16464
Subject: 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




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