This is the title of a paper by economists Scott Cunningham and Todd Kendal that provides an overview the economics of prostitution and how it has been affected by technology for the forthcoming Handbook on Family Law and Economics. Here are some scattered observations.
Among the many interesting results they report are that 40% of prostitutes have a college degree, and 80% have had some college.
Apparently, the current economic downturn has led to churn in the industry and lower wages, as supply has expanded and demand has contracted. For many women this puts the market wage below their reservation wage, which drives them out of the market.
Uncommon for economists they report ethnographic results as well, for instance:
Ethnographic interviews with various workers revealed that spouses and partners were typically aware of, and even complicit in the sex worker’s labor supply, frequently working as a manager or assistant. These results indicate the necessity for a fuller understanding of the complex relationship between prostitution and marriage.
The authors apply a hedonic analysis to prostitute prices and thus estimate a price premium for various characteristics including race, age, and services offered. Contrary to the economic literature showing either an Asian wage premium or no difference relative to whites, wages for Asian prostitutes are found to be systematically lower than for other minorities:
Another interesting question they address is what happens to the demand for sex ads on Craigslist when a $5 fee is imposed. The graph they provide tells the story:
There are many other fascinating results in the paper, and good information on datasets for researchers interested in these issues. Scott’s website with links to his other research is here, and you can follow him on twitter at @scottcun.