Abhatoo - Centre Nationale de Documentation

The evidence of higher income inequality leading to increased HIV prevalence through channels of coercion and migration has emerged. This, coupled with previously established macroeconomic impact of HIV/AIDS, connotes reverse causality that is likely to develop a cyclical effect. The plausible cyclicality can be identified through the mergence of a three stage relationship: Initially from income inequality to HIV prevalence; then from HIV prevalence to reduced human capital formation and subsequently generating human capital inequality via reduced investment in human capital of affected households and back to income inequality. We hypothesize that the effect of this plausible cyclicality is likely to increase the effect of income inequality on HIV prevalence. Our aim is to assess the effect of productivity gaps measured by human capital dispersion on the relationship between income inequality and HIV prevalence. Deriving 1999 dataset on human capital dispersion which is measured by years of schooling, quality of school system and rates of return for 99 countries, we estimate its linear dependence effect with income inequality on HIV prevalence. We find a significant and increased effect of income inequality on HIV prevalence of more than three times. This study sets the platform for using current datasets and generates a policy discussion for addressing productivity gaps as one of HIV/AIDS interventions.