The impact of HIV and AIDS on aggregate labour productivity: evidence from sub-Saharan Africa

A review of literature indicates that previous studies concentrate on the effects of HIV/AIDS on labour productivity at individual firms. This study investigates the impact of HIV prevalence rate and AIDS on aggregate labour productivity at the macroeconomy level in sub-Saharan Africa, using panel data from 1990-2013. The analysis considers both the instantaneous effect shown by HIV and the effect after the disease converts to AIDS. The sensitivity of the results was also examined within two sub-samples. System generalised method of moments (GMM) estimator was used in the estimation. HIV prevalence has significant negative effect on aggregate labour productivity in both the full sample and the two sub-samples. AIDS has a positive influence on aggregate labour productivity in the full sample and Eastern and Southern Africa sub-sample. This is, however, not beneficial. Rather, it is detrimental, as it was attributable to reduce availability of labour due to increase in mortality