Modeling the Macroeconomic Impact of HIV/AIDS

Author/Editor:

Markus Haacker

Publication Date:

November 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper addresses the impact of HIV/AIDS on per capita output and income, with particular emphasis on the role of labor mobility between the formal and informal sectors, and the impact of the epidemic on investment decisions. The study finds that HIV/AIDS affects both the supply of labor and the demand for labor in the formal sector. Only if there is a significant rise in the capital-labor ratio, will there be an increase in formal sector employment. However, this is associated with a decline in the rate of return to capital. To the extent that companies respond to this by reducing investment, conventional models underestimate the adverse impact on employment, per capita output, and income. The analysis of the impact of HIV/AIDS on output is complemented by an assessment of the impact on income.

Series:

Working Paper No. 2002/195

Subject:

Capital productivity Health HIV and AIDS Labor National accounts Personal income Production Unemployment Unskilled labor

English

Publication Date:

November 1, 2002

ISBN/ISSN:

9781451859928/1018-5941

Stock No:

WPIEA1952002

Pages:

23

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