A Theory of Prostitution

A Theory of Prostitution
Lena Edlund and Evelyn Korn

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February 16, 2001
Abstract
Prostitution is a profession that is low-skill, labor intensive, female,
and well paid. This paper proposes the following explanation. A woman
can be either wife or prostitute, but not both. If marriage is a source of
income for women, then the prostitute has to be compensated for foregone
marriage market opportunities. Hence, prostitution must be better remu-
nerated than other low-skill occupations. Furthermore, we discuss the
link between income and prostitution, and show that prostitution may
decrease not only in female income but also in male income, suggesting
one reason why prostitution has seen a secular decline in developed coun-
tries. We point to the role of male sex ratios, and males in transit, in
sustaining high levels of prostitution, and discuss possible reasons for its
low reputation. Finally, we argue that recognition of prostitution as a fe-
male strategy may add to the understanding of the evolution of marriage
patterns.
Key words: Prostitution; marriage.
JEL article classification: D10, J16, J49
∗
Edlund: Dept. of Economics, Columbia University; 420 W. 118th Street; New York,
NY 10027. [email protected]. Korn: Eberhard-Karls-Universit ̈at T ̈ubingen, Nauklerstr.
47, 72074 T ̈ubingen, Germany. [email protected]. The authors thank Erwin
Amann, Marcus Asplund, Tore Ellingsen, Daniel Hamermesh, Wolfgang Leininger, Steven
Levitt, Casey B Mulligan, Dilip Mookherjee, J Mark Ramseyer, Sherwin Rosen, Xavier Sala-
i-Martin, Ulf Schiller, Aloysius Siow, and seminar participants at the University of Bergen,
University of Uppsala, and IUI, for helpful discussions. An anonymous referee provided many
valuable suggestions. Edlund thanks the Swedish Council for Research in the Humanities and
Social Sciences for financial support. Korn thanks Dortmund University and the Sun Yat-Sen
Institute for Social Sciences and Philosophy at Academia Sinica, Taipei, where part of the
work was done. All remaining errors are ours.
I wander thro’ each charter’d street,
Near where the charter’d Thames does flow,
And mark in every face I meet
Marks of weakness, marks of woe.
…
But most thro’ midnight streets I hear
How the youthful Harlot’s curse
Blasts the new born Infant’s tear,
And blights with plagues the Marriage Hearse.
(William Blake, “London”,
Songs of Experience,
1794)
1 Introduction
Prostitution is a multi-billion dollar business that employs millions of women
world wide. A recent ILO study estimated that in Indonesia, Malaysia, the
Philippines and Thailand, between 0.25 and 1.5 percent of the female population
work as prostitutes and that the sex sector accounts for between 2 to 14 percent
of the gross domestic product (Lim [33]). Prostitution is more common in less
developed countries, but far from absent in developed ones (e.g. Philipson and
Posner [42]; Atchinson, Fraser and Lowman [1]). The 1992 National Health and
Social Life Survey (NHSLS) found that about 2 percent of American women
had ever sold sex (Laumann [31]). A government estimate put the number of
prostitutes in Germany at 150,000 (Morell [34]) and Amsterdam is believed to
have about 25,000 prostitutes (Financial Times, 27 October 1999).
Prostitution has an unusual feature: it is well paid despite being low-skill,
labor intensive and, one might add, female dominated. Earnings even in the
worst paid type, streetwalking, may be several multiples of full time earnings in
professions with comparable skill requirements. For instance, newspaper reports
of earnings for prostitutes in Sweden in 1998 were as high as SEK 14,000 (USD
1,750) a day (Aftonbladet 25 September 1998), amounting to about a month’s
earnings in a regular unskilled job. The Economist [14] reported that Arabic
women could make USD 2,000 a night in the Gulf states, and in the same
article, a Latvian prostitute claimed she averaged USD 5,000 per month, 20
times the average wage. How can equilibrium earnings in a profession with only
rudimentary skill and capital requirements be such that a woman can make in
a day what for most women takes weeks or months?
The key to this puzzle may lie in the following observation: a woman cannot
be both a prostitute and a wife. Combine this with the fact that marriage can be
an important source of income for women, and it follows that prostitution must
pay better than other jobs to compensate for the opportunity cost of foregone
marriage market earnings