Ideas to Action:

Independent research for global prosperity


The Economic Impact of AIDS Treatment: Labor Supply in Western Kenya

Monday, January 30, 2006 - 12:00pm to 1:30pm

Center for Global Development
1800 Massachusetts Ave. NW, Third Floor
12:00-1:30 pm

Harsha Thirumurthy, a Ph.D. Candidate in Economics at Yale University, will present The Economic Impact of AIDS Treatment: Labor Supply in Western Kenya.

Please RSVP to Sarah Dean by January 27th at

Abstract: Antiretroviral (ARV) therapy has been shown to reduce morbidity and mortality among HIV infected individuals. In sub-Saharan Africa, the region most affected by HIV/AIDS, little is known about the extent to which ARV therapy also effects socio-economic outcomes. Using longitudinal survey data that were collected in collaboration with a treatment program in western Kenya, this paper is the first to estimate the economic impacts of treatment. The responses in two important outcomes are studied: (1) labor supply of adult AIDS patients receiving treatment; and (2) labor supply of children and adults living in the patients’ households. These responses are identified by examining changes in the treatment group’s labor supply over time, using data from a random sample of households in the survey area to control for time-varying factors (such as seasonality) that also influence labor supply. We find that the provision of ARV therapy leads to a large and relatively immediate increase in patients’ labor supply. Within six months after the initiation of treatment, there is a 20 percent increase in the likelihood of participating in the labor force and a 35 percent increase in weekly hours worked. The responses in the labor supply of patients’ household members are heterogeneous. Young boys and women work considerably less after initiation of treatment, while girls and men do not change their labor supply. Most importantly, these results show that ARV therapy influences intrahousehold time allocation decisions and that it has non-health benefits for patients and their household members.