On the economic determinants of prostitution: the marriage compensation and unilateral divorce in U.S. states

Abstract

Este paper estudia el efecto de la ley de divorcio unilateral sobre la prostitución. El artículo encuentra que dicha ley reduce la prostitución. El mecanismo más plausible, tras analizar los datos, es el sugerido por la literatura.This paper merges two strands of the literature to study the economic determinants of prostitution. First, there is empirical evidence that unilateral divorce laws improve wives' welfare. Second, the literature has hypothesized that female prostitutes earn high wages as a compensation for forgone marriage market opportunities. Therefore, according to the literature unilateral divorce laws should decrease prostitution as a result of better wives' welfare. I build a unique panel data set to test this prediction. Differences in the timing of entry into force of unilateral divorce laws across U.S. states provide a quasi-experimental setting allowing to estimate the effect of unilateral divorce laws on female prostitution (proxied by female prostitutes' arrests). Using a difference-in-difference estimation approach, I find that unilateral divorce reduces prostitution. Combining various data sets, I explore several mechanisms that could be driving this negative relationship. In line with the literature, the mechanism that fits best the evidence is one where unilateral divorce improves the option value of getting married by increasing wives' welfare. As a result, the opportunity cost of becoming a female prostitute increases, and the supply of prostitution declines. To the best of my knowledge, this is one of the first papers to show that improving prostitutes' outside option deters prostitution.