At much higher levels of human capital in contrast

This preview shows page 7 - 10 out of 38 pages.

uate itself. At much higher levels of human capital, in contrast, affluencewill yield a fine upbringing and education, and so beget still more afflu-ence. High levels of premature adult mortality can give rise to a povertytrap, with an increasing share of the population mired in poverty and fac-ing little or no prospect of upward mobility, and may dampen the accu-mulation of human capital even under conditions of affluence. The102CLIVEBELL, SHANTAYANANDEVARAJAN,ANDHANSGERSBACH
outbreak of an epidemic may even pitch what was a growing system intothe widening jaws of a poverty trap.Basic ModelThe place to start is with the formation of families and of human capi-tal. For the present, let the family structure be nuclear. At the beginning ofeach period (generation) t, every young adult chooses a partner with thesame level of human capital—that is to say, there is assortative mating.Each cohort begins with equal numbers of young men and women, and allfind a partner. All couples have their children soon afterward. With AIDSvery much in mind, premature adult mortality is assumed to occur abouta decade into full adulthood, this being the median time from infection todeath in the absence of treatment with antiretroviral drugs. Thus, whenthe children have just started school, some parents sicken and then die,leaving their children as half or full orphans. At this stage, therefore, thefamily will find itself in one of the following four states:both parents survive into old age (st= 1),the father has died (st= 2),the mother has died (st= 3),both parents have died (st= 4).Let Λt(st) denote the surviving adults’ total human capital when thefamily is in state st, so thatΛt(1) = 2λt,Λt(2) = Λt(3) = λt,Λt(4) = 0,where λtdenotes the level of human capital possessed by each parent. Letthe probability that a family formed at the beginning of period twinds upin state stbe denoted by π(st). Given the assumption that each cohortbegins adulthood with equal numbers of males and females, the propor-tion of adults surviving into old age is given byκt= [2π(1) + π(2) + π(3)]/2 = [1 + π(1) – π(4)]/2.(1)The relationship among between π(st),κt, and the mortality statistic qisdeferred to a later section.Apart from innate ability, the two main factors that influence the levelof human capital a young adult attains are the quality of childrearing andformal education. The former involves not only care and a loving upbring-ing, but also the transfer of knowledge. As a rule, it is surely both increas-ing with the parents’ human capital and complementary with formaleducation. Let the latter be represented by the fraction of childhood,et[0, 1], spent in school, where this phase of childhood may be thoughtThinking About the Long-Run Economic Costs of AIDS103
of as spanning the period from 6 to 18 years of age. Then the processwhereby these factors yield human capital in adulthood in period t + 1 fora child born in period tcan be represented byλt+1= z(st)g(et) Λt(st) + 1, with st

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture