Wednesday, August 8, 2012

Legal prostitution and human trafficking

Human trafficking is a sad manifestation of inequality that has proven difficult to eradicate with bans and laws. Maybe market based approaches could have more success. As a significant part of human trafficking is linked to prostitution, intervention on the prostitution market seems like a natural opportunity. Specifically, if prostitution is made legal, and human trafficking is illegal, then illegally trafficked prostitutes should be pushed out of the market because legal prostitutes are generally preferred.

Seo-Young Cho, Axel Dreher and Eric Neumayer show that this logic does not hold, or is at least more than compensated by an effect going the other way: legalizing the prostitution market increases its size so much that the supply of legal prostitutes is not sufficient and illegally trafficked ones are needed. They come to this conclusion by using data from 150 countries, all except very-low-income ones that should not be recipients of human trafficking. This means the regressions should not suffer of selection bias like some previous studies. But I wonder whether the legalization of prostitution can be treated as exogenous in this context. Indeed, if some legislators were motivated by human trafficking to legalize prostitution, the estimated relationship could be biased.

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