Economic Theories and Empirics on the Sex Market

This article presents a number of testable predictions from Edlund and Korn’s (2002) theoretical model. In their seminal study, Edlund and Korn propose a model that sees prostitution as an alternative to marriage. According to the them, women can only choose between marriage and prostitution, and “prostitution is low-skill, labor intensive, female, and well paid.” Because prostitution has such an unusual combination of attributes, traditional labor theories might not be able to explain the wage differential of this profession. The Edlund and Korn (EK) model offers “a marriage market explanation to this puzzle.” The critical assumption is that prostitutes need to be compensated for the forgone marriage market opportunities. This chapter tests three unique predictions from the EK model: (1) that there exists a wage differential for the sex worker, (2) that prostitution falls with female wage and male income, and (3) that foreign prostitutes should have a lower wage, ceteris paribus. These predictions are examined using two new datasets of Internet-mediated prostitution. The chapter finds evidence for the first two predictions but not for the third.

Ceteris paribus · Differential (mechanical device) · Economics · Efficiency wage · Labour economics · Marriage market · Microeconomics · Wage · Migration, Ethnicity, and Economy · Sex work and related issues · Taxation and Compliance Studies

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