A recent study by health economists examined the economic impact of the President’s Emergency Plan for AIDS Relief (PEPFAR) in sub-Saharan Africa. The findings, published in the June issue of Health Affairs, were that PEPFAR funding was associated with an increase in employment among males, but no change was found in female employment.
Along with devastating health consequences, the HIV/AIDS epidemic in sub-Saharan Africa has had severe economic effects. PEPFAR was established in 2003 and, by 2013, the program was providing over 6.7 million people infected with HIV access to antiretroviral therapy (ART), yielding significant health improvements. But the population-level economic effects of PEPFAR are not well known.
“This study is the first to measure the impact of PEPFAR on employment outcomes throughout sub-Saharan Africa,” says Zachary Wagner, lead author of the study and a doctoral student in health economics at the UC Berkeley School of Public Health. “It’s also the first to explore the effect of any ART program on economic outcomes at the population level.”
The authors looked at PEPFAR’s less-studied economic impact, and identified a 13 percent increase in male employment in countries the program assisted. The employment gains were largest among younger males. They also found that increasing PEPFAR per capita funding by $100 was associated with a 9.1-percentage-point increase in employment among males.
“Greater per capita PEPFAR funding coincided with larger increases in male employment,” says Wagner. “This provides us with some confidence that our estimated effect was due to PEPFAR and not to any confounding factors.”
The analysis looked at countries in sub-Saharan Africa that had Demographic and Health Surveys conducted both before and after 2004. These surveys collect demographic and health information, including employment information, in low- and middle-income countries. Ten PEPFAR focus countries and 11 control countries were included in the analysis, with survey information from over 750,000 men and women aged 15-54.
According to the authors, the rise in employment generates economic benefits equal to half of PEPFAR’s cost. They recommend considering these findings when making future aid allocation decisions.
“Given the ongoing debate on how public health funding should be spent, a better understanding of these economic benefits will help guide policy makers toward making the most efficient use of increasingly scarce resources,” says Wagner.
Coauthors of the study are Jeremy Barofsky, Okun-Model Fellow at the Brookings Institution, and Neeraj Sood, associate professor of health economics at the University of Southern California.
By Linda Anderberg