Aids, Human Capital and Growth

Corrigan, Paul; Glomm, Gerhard; Mendez, Fabio

doi:10.2139/ssrn.767006

Aids, Human Capital and Growth

33 Pages Posted: 5 Aug 2005

See all articles by Paul Corrigan

Paul Corrigan

Michigan State University - Department of Economics

Gerhard Glomm

Indiana University Bloomington - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Fabio Mendez

University of Arkansas - Sam M. Walton College of Business

Date Written: July 22, 2005

Abstract

We use an overlapping generations model of human capital accumulation to study the impact of the AIDS crises on growth. In our model, the AIDS crisis lowers life expectancy and thus the incentive to save and accumulate physical capital. Moreover, the AIDS crisis lowers the returns to human capital investment by creating large numbers of AIDS orphans. We calibrate the model to sub-Saharan economies. If infection rates are around 15-20 percent of the adult population, as they are in countries like Zambia and Botswana, growth rates of per capita income drop about 30-40%. Moreover, the growth rate effects persist beyond the (perhaps counterfactual) end of the AIDS crisis.

Keywords: AIDS, Growth

JEL Classification: O11, I12

Suggested Citation: Suggested Citation

Corrigan, Paul and Glomm, Gerhard and Mendez, Fabio, Aids, Human Capital and Growth (July 22, 2005). Available at SSRN: https://ssrn.com/abstract=767006 or http://dx.doi.org/10.2139/ssrn.767006