Health and labor supply in the context of HIV/AIDS: the long- run economic impacts of antiretroviral therapy

Using longitudinal survey data collected in Kenya, this paper estimates the longer-term impacts of antiretroviral therapy (ART) on the labor supply of treated adults and their household members. Building upon previous work in Kenya, data collected from 2004-2006 indicate that early evidence on the short-run impacts of ART tends to be upheld over the long-term as well. The results show that the labor supply response among treated adults occurs rapidly and is sustained through the 3-year observation period in our study. Since patient health would continue to decline without treatment, these labor supply responses could be viewed as underestimates of the impact of treatment on the treated. Attrition of adult patients from the study are shown to be strongly associated with poor initial health status. Lower bound estimates of the labor supply impacts, based on the assumption of zero labor supply for those not retained in the study, remain statistically significant. The responses in the labor supply of patients’ household members are heterogeneous. The labor supply of adult household members declines while that of children is unchanged. The primary results for treated adults further underscore the strong relationship between health and labor supply that has been observed in other contexts.