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Sex, Drugs, Kidneys and Migrants: Economic Analyses of Contested Transactions

Paper Session

Saturday, Jan. 5, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, International 5
Hosted By: American Economic Association
  • Chair: Nicola Lacetera, University of Toronto

Testing for Repugnance in Economic Transactions: Evidence from Guest Work in the Gulf

Michael A. Clemens
,
Center For Global Development

Abstract

Workers from poor countries can find enormous economic opportunity by working temporarily in a rich country. Such “guest workers” commonly triple or quadruple their earnings. But agencies that fight global poverty do little to facilitate guest work. This may be because guest workers are perceived to typically suffer negative side effects that outweigh the benefits. For example, guest workers are sometimes perceived to be systematically cheated and deceived by recruiters, incurring debts from loan sharks that they can never repay. It is difficult for research to test those perceptions. For example, it is insufficient to simply ask Indian workers in the Gulf about their earnings or working conditions, and compare them to workers in India. Anecdotes gathered from workers may not reflect typical workers’ experiences. Indian workers who go to the Gulf could be very different from other Indian workers. And Indians who speak well of a migration experience today could regret the decision later. This paper uses a natural experiment to test several perceptions of harmful side-effects on Indian guest workers in the Gulf. The natural experiment is a sudden stoppage of construction-work recruitment in 2008, which created large pools of workers whose ability to migrate was largely a coincidence of the timing of their job application, but are otherwise very similar to each other. For example it allows research to test whether typical guest workers became more indebted or less indebted, three years later, than otherwise similar Indians who did not become guest workers. The research shows little evidence that the harmful side-effects often ascribed to guest work are typical and systematic, though this does not contradict the occurrence of many individual cases of harmful side-effects.

Paying for Kidneys? A Randomized Survey and Choice Experiment

Mario Macis
,
Johns Hopkins University
Julio Elias
,
University of CEMA
Nicola Lacetera
,
University of Toronto

Abstract

Regulation and public policies are often the result of competition and compromise between different views and interests. In several cases, strongly held moral beliefs voiced by societal groups lead lawmakers to prohibit certain transactions or to prevent them from occurring through markets. However, there is limited evidence about the specific nature of the general population’s opposition to using prices in such contentious transactions. We conducted a choice experiment on a representative sample of Americans to examine preferences for legalizing payments to kidney donors. We found strong polarization, with many participants in favor or against payments regardless of potential supply gains. However, about 20% of respondents would switch to supporting payments for large enough supply gains. Preferences for compensation have strong moral foundations. Participants especially reject direct payments by patients, which they find would violate principles of fairness. We corroborate the interpretation of our findings with the analysis of a costly decision to donate money to a foundation that supports donor compensation.

Federalism, Partial Prohibition, and Cross Border Sales: Evidence from Recreational Marijuana

Benjamin Hansen
,
University of Oregon
Keaton Miller
,
University of Oregon
Caroline Weber
,
University of Oregon

Abstract

Marijuana is partially prohibited: though banned federally, it is available to 1 in 4 U.S. adults under state statutes. We measure the size of the interstate trade generated by state-level differences in legal structure with a natural experiment: Oregon allowed stores to sell marijuana for recreational use on October 1, 2015, next to Washington where stores had been selling recreational marijuana since July 2014. Using administrative data covering the universe of Washington's sales and a differences-in-discontinuities approach, we find retailers along the Oregon border experienced a 36% decline in sales immediately after Oregon's market opened. Our results imply that Washington has earned between $64 million and $100 million in tax revenue from cross-border shoppers to date. These findings suggest that cross-border incentives may create a "race to legalize."

Crimes against Morality: Unintended Consequences of Criminalizing Sex Work

Manisha Shah
,
University of California-Los Angeles
Lisa Cameron
,
University of Melbourne
Jennifer Muz
,
George Washington University

Abstract

We examine the impact of criminalizing sex work, exploiting a natural experiment in which local officials criminalized sex work in one district in East Java, Indonesia, but not in neighboring districts. We collect a unique dataset comprised of panel data on female sex workers and their clients before and after the change. We find that criminalization increases the prevalence of sexually transmitted infections among female sex workers by 58 percent, measured by biological tests. The main mechanism driving this result is decreased access to condoms and condom use. We also show that criminalization decreases the likelihood that children of sex workers attend school and increases the likelihood they begin working to supplement household income.

Craigslist’s Effect on Violence Against Women

Scott Cunningham
,
Baylor University
Gregory DeAngelo
,
West Virginia University
John Tripp
,
Baylor University

Abstract

Female prostitution is both illegal in most American cities and extremely dangerous, as prostitutes face risks of violence from the environment and clients. Previous studies suggest that prostitution has the highest homicide rate of any female intensive occupation in the United States by several orders of magnitude. Policies that can efficiently minimize these hazards are therefore of prima facie importance. Between 2002 and 2010, Craigslist provided an “erotic services” section on its front page which was used almost exclusively by prostitutes to advertise illegal sex services. The company opened this service in different cities at different points in time. We use a differences-in-differences strategy to identify its causal effect on female safety and find that Craigslist erotic services reduced the female homicide rate by 17.4 percent. We also find modest evidence that erotic services reduced female rape offenses. Our analysis suggests that this reduction in female violence was the result of street prostitutes moving indoors and matching more efficiently with safer clients.
Discussant(s)
Matthew Weinzierl
,
Harvard University
Stefanie Stantcheva
,
Harvard University
Jennifer Doleac
,
Texas A&M University
Nicola Lacetera
,
University of Toronto
JEL Classifications
  • B5 - Current Heterodox Approaches
  • D4 - Market Structure, Pricing, and Design