Regulating Prostitution: Theory and Evidence from Italy

Giovanni Immordino and Francesco Flaviano Russo ()
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Francesco Flaviano Russo: University of Naples "Federico II" and CSEF

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

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 but less effective in reducing harm. 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 a sharp increase in quantity. While prohibition is preferable to minimize quantity, regulation is best to minimize harm.

Keywords: Prostitution; Regulation; Prohibition; Lasseiz-faire. (search for similar items in EconPapers)
JEL-codes: H21 I18 L51 O17 (search for similar items in EconPapers)
Date: 2012-02-20, Revised 2014-11-12
New Economics Papers: this item is included in nep-iue and nep-reg
Note: A previous version of the paper has been circulated under the title ”Regulating Prostitution: Theory and Evidence from Italy”.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Journal of Public Economics, 2015, vol. 121, pp. 14-31

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