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Bang for Your Buck: STI Risk and Pregnancy Risk as Sources of the Price Premium for Unprotected Sex

  • Manda, Constantine
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    Sex workers receive a price premium for unprotected sex. Research has inferred that the source of this premium is a compensating differential for STI risk. I introduce a compensating differential for pregnancy risk as a novel source through a simple model that incorporates both STI risk and pregnancy risk. I empirically test this using a rich panel dataset of 19,041 sexual transactions by 192 sex workers in Busia, Kenya collected during 2005 and 2006. I run sex worker-fixed effects regressions and find that compensating differentials for STI risk and pregnancy risk are sources of the price premium for unprotected sex. The price premium for pregnancy risk is USD 10, and USD 2 for STI risk (24 percent of average price). I also test for clients' disutility for condoms, another competing theory, and find that it is not a statistically significant source of the premium. Identifying and estimating sources of the price premium for unprotected sex will allow policymakers to implement interventions that will reduce both the supply and the demand for unprotected sex.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 52864.

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    Date of creation: 06 Dec 2013
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    Handle: RePEc:pra:mprapa:52864
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    1. Raj Arunachalam & Manisha Shah, 2013. "Compensated for Life: Sex Work and Disease Risk," Journal of Human Resources, University of Wisconsin Press, vol. 48(2), pages 345-369.
    2. Robinson, Jonathan & Yeh, Ethan, 2009. "Transactional sex as a response to risk in western Kenya," Policy Research Working Paper Series 4857, The World Bank.
    3. Rao, Vijayendra & Gupta, Indrani & Lokshin, Michael & Jana, Smarajit, 2003. "Sex workers and the cost of safe sex: the compensating differential for condom use among Calcutta prostitutes," Journal of Development Economics, Elsevier, vol. 71(2), pages 585-603, August.
    4. Lena Edlund & Evelyn Korn, 2002. "A Theory of Prostitution," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 181-214, February.
    5. Paul Gertler & Manisha Shah & Stefano M. Bertozzi, 2005. "Risky Business: The Market for Unprotected Commercial Sex," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 518-550, June.
    6. Emily Oster, 2005. "Sexually Transmitted Infections, Sexual Behavior, and the HIV/AIDS Epidemic," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 467-515, May.
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