Do Sex Workers Respond to Disease? Evidence from the Male Market for Sex.

The commercial sex sector bears an importance disproportionate to its size in terms of disease transmission. Epidemiological models suggest that the behavioral response of highactivity core groups like sex workers is critical to the course of HIV and other sexually transmitted infection (STI) epidemics (Shahmanesh et al. 2008). Existing research shows that female sex workers in developing countries are paid anywhere between 9 and 66 percent more for non-condom sex (Gertler, Shah, and Bertozzi 2005; Rao et al. 2003; Robinson and Yeh 2011). Recently, Arunachalam and Shah (forthcoming) have shown this risk premium for unprotected sex is best understood as a compensating differential for increased disease risk. In locations with close to zero disease, the risk premium is close to zero and not statistically significant. However, the premium increases as disease risk increases; a one percentage point increase in the local disease rate increases the premium for non-condom sex by 33 percent. This finding is important because it indicates that the market has the ability to dampen the self-limiting feature of STI epidemics. As disease risk rises, the compensating differential rises as well, leaving the marginal sex worker indifferent between unprotected and protected sex. This could exacerbate the spread of disease. As far as we know, there is no empirical evidence for whether this type of compensating differential exists in developing country male sex markets. In the United States, evidence is somewhat mixed. Qualitative evidence suggests Do Sex Workers Respond to Disease? Evidence from the Male Market for Sex †