Sex Workers and the Cost of Safe Sex: The Compensating Differential for Condom Use Among Calcutta Prostitutes
Posted: 15 Jan 2003
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
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