Human trafficking leaves no land untouched. In 2013 the U.S. State Department estimated that there are 27 million victims worldwide trafficked for forced labor or commercial sex exploitation. A 2011 report from the Department of Justice found that of more than 2,500 federal trafficking cases from 2008 to 2010, 82% concerned sex trafficking and nearly half of those involved victims under the age of 18. Scholars note that the phenomenon represents a serious health issue for women and girls worldwide. Beyond the human cost, trafficking may also compromise international security, weaken the rule of law and undermine health systems.
Since the United Nations adopted the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children in 2000, global efforts have been made by the international community to address the growing problem. Challenges remain significant, however, in particular because of its profitability: According to the International Labor Organization, human trafficking is a $32 billion industry, second only to illicit drugs. A 2011 paper in Human Rights Review found that sex slaves cost on average $1,895 each while generating $29,210 annually, leading to “stark predictions about the likely growth in commercial sex slavery in the future.”
A 2012 study published in World Development, “Does Legalized Prostitution Increase Human Trafficking?” investigates the effect of legalized prostitution on human trafficking inflows into high-income countries. The researchers — Seo-Yeong Cho of the German Institute for Economic Research, Axel Dreher of the University of Heidelberg and Eric Neumayer of the London School of Economics and Political Science — analyzed cross-sectional data of 116 countries to determine the effect of legalized prostitution on human trafficking inflows. In addition, they reviewed case studies of Denmark, Germany and Switzerland to examine the longitudinal effects of legalizing or criminalizing prostitution.
The study’s findings include:
- Countries with legalized prostitution are associated with higher human trafficking inflows than countries where prostitution is prohibited. The scale effect of legalizing prostitution, i.e. expansion of the market, outweighs the substitution effect, where legal sex workers are favored over illegal workers. On average, countries with legalized prostitution report a greater incidence of human trafficking inflows.
- The effect of legal prostitution on human trafficking inflows is stronger in high-income countries than middle-income countries. Because trafficking for the purpose of sexual exploitation requires that clients in a potential destination country have sufficient purchasing power, domestic supply acts as a constraint.
- Criminalization of prostitution in Sweden resulted in the shrinking of the prostitution market and the decline of human trafficking inflows. Cross-country comparisons of Sweden with Denmark (where prostitution is decriminalized) and Germany (expanded legalization of prostitution) are consistent with the quantitative analysis, showing that trafficking inflows decreased with criminalization and increased with legalization.
- The type of legalization of prostitution does not matter — it only matters whether prostitution is legal or not. Whether third-party involvement (persons who facilitate the prostitution businesses, i.e, “pimps”) is allowed or not does not have an effect on human trafficking inflows into a country. Legalization of prostitution itself is more important in explaining human trafficking than the type of legalization.
- Democracies have a higher probability of increased human-trafficking inflows than non-democratic countries. There is a 13.4% higher probability of receiving higher inflows in a democratic country than otherwise.
While trafficking inflows may be lower where prostitution is criminalized, there may be severe repercussions for those working in the industry. For example, criminalizing prostitution penalizes sex workers rather than the people who earn most of the profits (pimps and traffickers).
“The likely negative consequences of legalised prostitution on a country’s inflows of human trafficking might be seen to support those who argue in favour of banning prostitution, thereby reducing the flows of trafficking,” the researchers state. “However, such a line of argumentation overlooks potential benefits that the legalisation of prostitution might have on those employed in the industry. Working conditions could be substantially improved for prostitutes — at least those legally employed — if prostitution is legalised. Prohibiting prostitution also raises tricky ‘freedom of choice’ issues concerning both the potential suppliers and clients of prostitution services.”
Related research: A December 2013 paper, “Human Trafficking and Regulating Prostitution,” from the New York University Law and Economics program, takes a theoretical approach to supply and demand issues, and the dynamics of markets. Leaving aside the implications for trafficking, there is a vast body of research on the legalization of prostitution and the effects on societies around the globe. A 2013 paper for the National Bureau of Economic Research finds some positive effects of legalization in the U.S. context. Qualitative survey research with sex workers themselves also continues to provide insights.
Keywords: prostitution, crime, sex crimes, scale effect, substitution effect