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Regulating prostitution: A health risk approach

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  • Immordino, G.
  • Russo, F.F.

Abstract

We build an equilibrium model of prostitution where clients and sex workers choose to demand and supply sex under three legal regimes: prohibition, regulation and laissez-faire. The key feature is the endogenous evolution of the risk as a consequence of policy changes. We calibrate the model to empirical evidence from Italy and then compare the effect of different policies on the equilibrium quantity of prostitution and on the harm associated with it. A prohibition regime that makes it illegal to buy sex but not to sell it is more effective than the opposite regime in reducing quantity. Taxes are one inducement to go illegal and prevent some of the less risky individuals from joining the market, leaving it smaller but riskier. A licensing system that prevents some infected individuals from joining the legal market reduces the risk and is therefore associated with an increase in quantity. Prohibition is preferable to minimize quantity only if a high expected fine is feasible. Regulation is best to minimize harm.

Suggested Citation

  • Immordino, G. & Russo, F.F., 2015. "Regulating prostitution: A health risk approach," Journal of Public Economics, Elsevier, vol. 121(C), pages 14-31.
  • Handle: RePEc:eee:pubeco:v:121:y:2015:i:c:p:14-31
    DOI: 10.1016/j.jpubeco.2014.11.001
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    Cited by:

    1. Alexander Muravyev & Oleksandr Talavera, 2018. "Unsafe Sex in the City: Risk Pricing in the London Area," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(5), pages 528-549, November.
    2. G. Immordino & F. Russo, 2015. "Laws and stigma: the case of prostitution," European Journal of Law and Economics, Springer, vol. 40(2), pages 209-223, October.
    3. Perrotta Berlin, Maria & Spagnolo, Giancarlo & Immordino, Giovanni & F. Russo, Francesco, 2019. "Prostitution and Violence: Evidence from Sweden," SITE Working Paper Series 52, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 25 Jun 2020.
    4. Marilena Locatelli & Steinar Strøm, 2018. "Demand for sexual services in Britain: Does Sex Education Matter?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(5), pages 550-571, November.
    5. Lisa De Simone & Rebecca Lester & Kevin Markle, 2020. "Transparency and Tax Evasion: Evidence from the Foreign Account Tax Compliance Act (FATCA)," Journal of Accounting Research, Wiley Blackwell, vol. 58(1), pages 105-153, March.
    6. Philippe Adair & Oksana Nezhyvenko, 2019. "Assessing Key Figures of Prostitution in France and the European Union," Erudite Working Paper 2019-03, Erudite.
    7. Philippe Adair & Oksana Nezhyvenko, 2016. "Sex Work Vs. Sexual Exploitation: Assessing Guesstimates For Prostitution In The European Union," Post-Print hal-01672874, HAL.
    8. Sonnabend, Hendrik & Stadtmann, Georg, 2018. "Good intentions and unintended evil? Adverse effects of criminalizing clients in paid sex markets with voluntary and involuntary prostitution," Discussion Papers 400, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
    9. Wilson, Nicholas, 2017. "The World’s Oldest Profession? Employment-Age Profiles from the Transactional Sex Market," GLO Discussion Paper Series 77, Global Labor Organization (GLO).
    10. Troy Quast & Fidel Gonzalez, 2017. "Sex Work Regulation and Sexually Transmitted Infections in Tijuana, Mexico," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 656-670, May.

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    More about this item

    Keywords

    Prostitution; Regulation; Prohibition; Laissez-faire;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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