Sex Work in Developing Countries


The scope for research on the sex sector remains large given how little economics work has been done in this area to date. For example, still very little is known about how regulating this market might affect public health outcomes. Different countries apply distinct regulatory techniques to their own sex markets. In some countries sex work is illegal, in other countries it is decriminalized, and in other places it is legal. However, very little is known about how these different regulatory procedures affect things like public health outcomes or the welfare of women involved in the sex industry. Gertler and Shah (2011) show that regulating the sex market in Ecuador can have some unintended consequences. They find that increasing enforcement of regulation in the street sector significantly decreases STIs. However, increasing enforcement in the brothel sector increases the probability that a sex worker will be infected with an STI. This is because increasing enforcement in the street shifts sex workers on the margin from the more risky street into the less risky brothels, thereby increasing street prices and reducing the overall number of street clients. As a result, overall infection rates fall. In contrast, increasing enforcement in the brothel sector can exacerbate public health problems by inducing some unlicensed brothel sex workers into the riskier street sector. This example and this entire article illustrate that sex workers clearly respond to economic incentives, which is an important lesson for policy implementation.

Savings behavior is another area calling for future research. Unlike most other professions, sex workers earn more at younger ages and their income decreases with age and experience (Arunachalam and Shah, 2008). Because of this inverted earnings to age profile, saving at younger ages should be a priority for these women. However, data show that young sex workers do not save much of their earnings. Whether this is due to lack of access to banks, lack of demand on their part, or some other reason is still unclear. This question is a much needed topic for future research.


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