Poor health kills small business: Illness and microenterprises in South Africa

Health Affairs

Volumn 26, Issue 2, 2007, Pages 474-482

  Chao, Li Wei ^a   Pauly, Mark ^b   Szrek, Helena ^c   Pereira, Nuno Sousa ^c   Bundred, Frances ^d   Cross, Catherine ^e   Gow, Jeff ^f  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b UNIVERSITY OF PENNSYLVANIA   (United States)

^c UNIVERSITY OF PORTO   (Portugal)

^d Development Finance   (South Africa)

^e HUMAN SCIENCES RESEARCH COUNCIL   (South Africa)

^f UNIVERSITY OF NEW ENGLAND   (Australia)

Author keywords

[No Author keywords available]

Indexed keywords

ACQUIRED IMMUNE DEFICIENCY SYNDROME; ADULT; ARTICLE; COMMERCIAL PHENOMENA; DEVELOPING COUNTRY; ECONOMICS; EMPLOYMENT; FEMALE; HEALTH STATUS; HUMAN; LONGITUDINAL STUDY; MALE; MANPOWER; MIDDLE AGED; SOUTH AFRICA;

ACQUIRED IMMUNODEFICIENCY SYNDROME; ADULT; COMMERCE; DEVELOPING COUNTRIES; EMPLOYMENT; FEMALE; HEALTH STATUS; HUMANS; LONGITUDINAL STUDIES; MALE; MIDDLE AGED; SOUTH AFRICA;

EID: 33947302234     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.26.2.474     Document Type: Article

References (13)

1. For a review of MSEs, see C. Liedholm and D.C. Mead, Small Enterprises and Economic Development: The Dynamics of Micro and Small Enterprises (London: Rutledge, 1999);
2. estimates of employment and GDP contributions of MSEs for South Africa can be found in Business Guidebook 2004/2005, 9th ed. (Sandton: WriteStuff Publishing, 2005), 241-243;
3. and South Africa Business Guidebook 2005/2006, 10th ed. (Sandton: WriteStuff Publishing, 2006), 216-218.
4. The National Small Business Act of 1996 in South Africa defines micro, small, and medium enterprises as having up to 5, 100, or 200 employees, respectively. See "President's Office, No. 1901, 27 November 1996, No. 102 of 1996: National Small Business Act, 1996," http://www.polity.org.za/html/ govdocs/legislation/1996/act96-102.html?rebookmark=1 (accessed 22 December 2006).
5. Ibid.
6. For an example of measurement of productivity loss from HIV/AIDS in a large firm, see M.P. Fox et al., "The Impact of HIV/AIDS on Labour Productivity in Kenya," Tropical Medicine and International Health 9, no. 3 (2004): 318-324.
7. Abt Associates, The Impending Catastrophe: A Resource Book on the Emerging HIV/AIDS Epidemic in South Africa, 2000, http://www.kff.org/ southafrica/20000515a-index.cfm (accessed 5 January 2006).
8. N. Wilkins, "HIV/AIDS and the Informal Sector," AIDS Analysis Africa 10, no. 1 (1999): 7-10.
9. J.E. Ware, M. Kosinski, and S.D. Keller, How to Score the SF-12 Physical and Mental Health Summary Scales, 2d ed. (Boston: Health Institute, New England Medical Center, 1995).
10. Population surveys with biomarkers for HIV estimated a 28.6 percent HIV prevalence among adults in urban informal areas in 2002. O. Shisana and L. Simbayi, Nelson Mandela/HSRC Study of HIV/AIDS: South African National HIV Prevalence, Behavioural Risks and Mass Media Household Survey 2002 (Cape Town: HSRC Press, 2002).
11. Our data set contains information on both MSE exits and entries. Because our sampling of households without businesses was random, new business entries among this group should be representative of entries in our surveyed EAs on average. Without counting those permanently lost to follow-up, we see that of the original 164 businesses in 2002, 34 closed by 2004 (see Exhibit 3), and of the original 115 households without a business in 2002, 9 opened businesses by 2004 (see Exhibit 4). From Exhibit 1, we see that 31 percent of all households screened had an existing business, but 69 percent of all households screened did not. With appropriate weighting, a total of 34 businesses closed but 20 businesses [or 9 x (0.69/0.31)] opened over the two-year period, for a net loss of 14 businesses (8.5 percent). This calculation underestimates the net business loss in the EAs, because it does not count those permanently lost to follow-up, which are more likely to be businesses that subsequently closed or households that never started a new business. Counting those permanently lost to follow-up as businesses that closed or households that never started a new business would imply a net closure of 70 businesses (out of the original 164 businesses, or 43 percent) over our three-year survey period. Moreover, there was permanent employment loss as a result of business closures, because businesses that survived over time did not expand in terms of the total number of employees per MSE. This suggests that the economic impact of poor health does not merely affect the people directly involved in the businesses, but also the community as a whole.
12. Since our goal was to test behavioral relationships, not to develop specific quantitative forecasts, and since our original sample was purposive, we did not attempt to weight our observations to some hypothesized population.
13. Education, income, and squared terms for the physical and mental health scores were all insignificant.