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Journal Article

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

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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Published by Oxford University Press on behalf of the World Bank
Africa | South Africa
2014-01-02T22:42:07Z | 2014-01-02T22:42:07Z | 2006-04-11

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).

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