The Macroeconomics of Targeting: The Case of an Enduring Epidemic

34 Pages Posted: 9 Nov 2006

See all articles by Clive Bell

Clive Bell

University of Heidelberg - South Asia Institute (SAI)

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2006

Abstract

What is the right balance among policy interventions in order to ensure economic growth over the long run when an epidemic causes heavy mortality among young adults? We argue that, in general, policies to combat the disease and promote education must be concentrated, in certain ways, on some subgroups of society, at first to the partial exclusion of others. This concentration involves what we term the macroeconomics of targeting. The central comparison is then between programs under which supported families enjoy the benefits of spending on health and education simultaneously (DT), and those under which the benefits in these two domains are sequenced (ST). When levels of human capital are uniformly low at the outbreak, DT is superior to ST if the subsequent mortality rate exceeds some threshold value. Outside aid makes DT more attractive; but DT restricts support to fewer families initially and so increases inequality.

Keywords: epidemic diseases, HIV/AIDS, poverty traps, macroeconomics of targeting, education support, health policies, single and double targeting

JEL Classification: E62, H20, I10, I20, O11

Suggested Citation

Bell, Clive and Gersbach, Hans, The Macroeconomics of Targeting: The Case of an Enduring Epidemic (October 2006). IZA Discussion Paper No. 2393. Available at SSRN: https://ssrn.com/abstract=943465

Clive Bell (Contact Author)

University of Heidelberg - South Asia Institute (SAI) ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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