Sex Workers and the Cost of Safe Sex: The Compensating Differential for Condom Use Among Calcutta Prostitutes

Posted: 15 Jan 2003

See all articles by Vijayendra Rao

Vijayendra Rao

World Bank - Development Research Group (DECRG)

Indrani Gupta

University of Delhi - Institute of Economic Growth (IEG)

Michael Lokshin

World Bank - Development Research Group (DECRG); National Research University Higher School of Economics

Smarajit Jana

Ministry of Health and Family Welfare, India - All India Institute of Hygiene and Public Health (AIIH&PH)

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Abstract

There have been almost no econometric studies of the market for prostitution despite the fact that perhaps the most important mode of HIV-AIDS transmission in developing countries is unprotected sex with sex workers. However, anecdotal evidence suggests that sex workers who use condoms face large income losses because clients have a preference for condom-free sex. The size of this compensating differential has important implications for AIDS policy. This paper uses a unique data set from a survey of sex workers in Calcutta, India to estimate the compensating differential for condom-use among prostitutes employing data from a random sample of sex workers in Calcutta. The bias resulting from unobserved heterogeneity common to compensating differentials estimates are corrected via a natural experiment - the non-systematic placement of sex workers in a safe sex information program - to identify the relationship between condom use and the price for sex. We find that sex workers who always use condoms face large losses of between 66 (FIML) and 79 per cent (IV).

Keywords: HIV/AIDS, Economics of Prostitution, Compensating Differentials

JEL Classification: I12, J4, O12, J3

Suggested Citation

Rao, Vijayendra and Gupta, Indrani and Lokshin, Michael and Jana, Smarajit, Sex Workers and the Cost of Safe Sex: The Compensating Differential for Condom Use Among Calcutta Prostitutes. Journal of Development Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=355760

Vijayendra Rao (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

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HOME PAGE: http://vijayendrarao.org

Indrani Gupta

University of Delhi - Institute of Economic Growth (IEG) ( email )

Delhi, 110007
India

Michael Lokshin

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-1772 (Phone)
202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/mlokshin

National Research University Higher School of Economics

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Smarajit Jana

Ministry of Health and Family Welfare, India - All India Institute of Hygiene and Public Health (AIIH&PH) ( email )

110 Chittaranjan Avenue
Calcutta, West Bengal 700 073
India

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