The Impact of PEPFAR on Employment Outcomes: Evidence from Sub-­‐Saharan Africa

RATIONALE: HIV/AIDS causes over half of all working-age adult deaths in Sub-Saharan Africa (UNAIDS 2010). To combat this burden, the international community nearly tripled total development assistance for health to approximately US$28 billion from 2000‐2010 (IHME, 2012). Much of this assistance is aimed at increasing access to antiretroviral therapy (ART) (PEPFAR, 2012; Global Fund, 2012). This investment has produced significant health returns in the form of increased life expectancy (Bor, et al. 2013) and decreased mortality (Bendavid & Bhattacharya 2009; Bendavid et al. 2012). Although it is often suggested that these health benefits translate into economic benefits, the general equilibrium economic effects of expanded ART access remains unclear.

OBJECTIVES: In this paper I use evidence from the President’s Emergency Plan For AIDS Relief (PEPFAR), which provided tens of billions of dollars towards increasing access to ART in selected countries. Several studies suggest that the HIV/AIDS epidemic has had substantial negative effects on economic outcomes (Bachmann & Booysen 2003; Dixon et al. 2002; Fox et al. 2004; Masanjala 2007). Dixon et al. (2002) estimate that the HIV/AIDS epidemic reduced average national economic growth rates by 2-4% per year across Africa. As a result, expanding access to ART, reverses some of the economic burden imposed by the HIV epidemic. ART may increase economic outcomes for several reasons.

METHODS: A difference-in-differences approach is used to measure changes in employment trends between 10 countries that received PEPFAR funding and 11 countries that did not. To bolster this analysis, I also conduct a within-country analysis using ART scale-up data from Tanzania.

RESULTS: I find that nations receiving PEPFAR funding experienced employment gains over countries that did not receive PEPFAR funding among males but not among females. This result is mirrored in Tanzania. The benefits of PEPFAR are concentrated at younger ages. This result is reversed in Tanzania, adding ambiguity.

CONCLUSIONS: This analysis suggests that the investments being made to treat HIV in sub‐Saharan Africa are both lengthening life and also generating positive economic benefits, raising the possibility that aid‐recipient nations will be able to cover an increasing share of their health system costs as their economic growth accelerates.