The Effect of Access to AIDS Treatment on Employment Outcomes in South Africa

Antiretroviral (ARV) drug treatment for AIDS dramatically improves health status and increases life expectancy, but there is little evidence on whether it improves employment outcomes in developing countries. In this paper, I examine the labor market effects of the government provision of free ARV treatment in public health clinics in South Africa, which enrolled over 500,000 patients between 2004 and 2008. I use geographic and temporal variation in the program rollout to identify the causal impact of ARV treatment on labor force participation and employment. This study is the first evaluation of the largest AIDS treatment program in the world. I find that the likelihood of labor force participation increases by 2 percentage points for Black men, and 3 percentage points for Black women, within 6 months of ARV treatment becoming available nearby. While there are no discernible effects of the distance to the nearest clinic on employment rates, this is consistent with relatively high unemployment rates and long unemployment durations in South Africa. These results demonstrate that better alignment and coordination of health and labor policy could improve efficacy and cost-effectiveness in both arenas. ∗Email: [email protected]. The most recent version of this paper is available at http://www-personal.umich.edu/∼zmclaren. I thank John DiNardo, Amar Hamoudi, David Lam, Jim Levinsohn, Edward Norton, Matt Rutledge, Jeff Smith, and Elias Walsh for helpful comments, and Adrienne Martz for careful research assistance. Support was received from the Rackham Graduate School and the Nonprofit and Public Management Center. 1