AIDS-related morbidity and mortality are expected to have a large economic impact in rural Malawi, because they reduce the time that adults can spend on production for subsistence and on income-generating activities. However, households may compensate for production losses by reallocating tasks among household members. The data demands for measuring these effects are high, limiting the amount of empirical evidence. In this paper, we utilize a unique combination of qualitative and quantitative data, including biomarkers for HIV, collected by the 2004 Malawi Diffusion and Ideational Change Project, to analyze the association between AIDS-related morbidity and mortality, and time allocation decisions in rural Malawian households. We find that AIDS-related morbidity and mortality have important economic effects on women's time, whereas men's time is unresponsive to the same shocks. Most notably, AIDS is shown to induce diversification of income sources, with women (but not men) reallocating their time, generally from work-intensive (typically farming and heavy chores) to cash-generating tasks (such as casual labor).
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