Human Trafficking and Regulating Prostitution

Abstract

We model a semi-coerced market for sex with voluntary prostitutes and trafficking. Trafficking victims generally constitute a non-zero share of supply in a decriminalized market. We analyze whether prostitution laws can restore the socially optimal outcome that would arise in a decriminalized market free from trafficking. No regulatory regime currently used in practice accomplishes this goal, but a novel policy, which combines the “Dutch” and “Swedish” regimes, would. Our analysis offers guidance for empirical studies on the impact of prostitution laws, and is pertinent to the debate on decriminalization of prostitution.