A THEORY OF PROSTITUTION

Resumo

This paper builds a theoretical model where individuals maximize inter temporal consumption-leisure utility function to explain the differential wage received by prostitutes. The model did not rely in any assumption about the skill level of the prostitutes. However, it is sufficiently general to explain the existence of both high-level (call girls) and low-level (street) prostitutes. The theoretical model is able to replicate quite well some stylized facts from the prostitution market. Furthermore, we use an inedited dataset about street prostitutes in Brasilia city to corroborate the theoretical predictions of our model. The econometric evidence supports compensation wage theory: prostitutes that work under more difficult conditions receive higher monthly wages.