Child Income as an Insurance Mechanism. Consequences for the Health-Education Relationship

Abstract

This paper analyzes the relationships between HIV/AIDS and education taking into account the appropriative nature of child income. We first build a simple theoretical model linking parental health risk, educational choice and appropriation of future children's income. We show that considering (remittances from) child's income as an insurance asset can reverse the usual negative relationship between disease prevalence and educational investment. This prediction is tested on data compiled from the Demographic and Health Survey (DHS) database for 17 Sub-Sahara African (SSA) countries between the years 2003 to 2010 for children aged between 6 and 22-years-old. To account for the hierarchical nature of the data we employ a multilevel analysis. We find that, in general, the impact of community HIV prevalence on school enrollment is insignificant. Once the data is split to account for differences in appropriation, the effect of community prevalence becomes positive and sometimes significant for highly appropriable groups (rural, girls) and remains either negative for the rest