Labor Market and Wage Impacts of HIV/AIDS in Rural Malawi*

There is limited but growing literature on the direct impacts of HIV/AIDS morbidity and mortality on the livelihoods of poor rural people. Less is known, however, about the wider impacts of the pandemic on livelihoods in rural communities, allowing for market interactions between households. These are difficult to study, but unskilled wages and food prices are critically important to the welfare of the poor people, whether directly affected by HIV/AIDS or not. If the HIV/AIDS epidemic depresses labor demands more than it contracts labor supply, wage rates in affected communities could fall, damaging the livelihoods of poor households. Under such circumstances, promotion of labor-saving enterprises and technologies could be disastrous for the healthy poor.