Income Shocks & HIV

Marshall Burke, University of California, Berkeley
Erick Gong, Middlebury College
Kelly M. Jones, International Food Policy Research Institute (IFPRI)

Despite a growing literature documenting strong linkages between income and health, there remains little understanding of how economic factors shape disease outcomes in the HIV/AIDS epidemic. Using individual level data from nineteen African countries, we show that negative income shocks can lead to substantial increases in HIV prevalence. We match data on individuals' HIV status from the DHS to data on local rainfall, a primary and exogenous source of variation in income for rural households in Africa. Infection rates for women (men) in HIV-endemic rural areas increase significantly by 14% (11%) for every drought event experienced in the previous 10 years. These increases appear driven by an outward shift in female supply of transactional sex. Shocks appear to explain up to 20% of the variance in HIV prevalence at the country level. Our findings suggest a role for formal insurance and social safety nets in tackling the HIV/AIDS epidemic.