Does Legalized Prostitution Increase Human Trafficking?

Research, Preprint OPEN
Seo-Young Cho ; Axel Dreher ; Eric Neumayer (2011)
  • Publisher: Courant Research Centre Poverty, Equity and Growth Göttingen
  • Subject: prostitution | substitution effect | F22 | K42 | global | human trafficking | human trafficking, prostitution, legalization, scale effect, substitution effect, global | scale effect | O15 | human trafficking; prostitution | legalization
    • jel: jel:F22 | jel:O15 | jel:K42
      ddc: ddc:330
    mesheuropmc: health care economics and organizations

This paper investigates the impact of legalized prostitution on human trafficking inflows. According to economic theory, there are two opposing effects of unknown magnitude. The scale effect of legalized prostitution leads to an expansion of the prostitution market, increasing human trafficking, while the substitution effect reduces demand for trafficked women as legal prostitutes are favored over trafficked ones. Our empirical analysis for a cross-section of up to 150 countries shows that the scale effect dominates the substitution effect. On average, countries where prostitution is legal experience larger reported human trafficking inflows.
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