The Economics of Prostitution in Thailand

Bhing Turongpon

Edited by Ansh Barot

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The prostitution industry, the buying and selling of the human body and sex itself, has long been established through its ubiquity within modern and historic societies, transcending across cultures and socioeconomic barriers. Thailand, a developing South-East Asian country, is notorious for its sex tourism sector, which has contributed to a self-perpetuating cycle of prostitution, trafficking, and illicit activity especially in urban areas. The effects of this are overwhelmingly negative; prevalence of disease, poverty traps, and abuse outline the severity of a growing and unregulated sex industry. Despite attempts from policymakers to legislate and combat the predominance of the trade, they have been unsuccessful due to weak enforcement and deterrent effects. Instead, by considering the way the sex work market can be modelled like that of a product market, policymakers could consider alternate policies, such as taxes, to provide socially optimal and desired outcomes.   

Thailand, since the 1970s, has become notorious for its sex trade, sex tourism, and the prostitution economy. Its high visibility in tourist areas (Bangkok, Pattaya etc.) has contributed to an international reputation which establishes the foundations and incentives that magnetises women into the industry. The theory of prostitution proposed by Edlund and Korn ​(2002) models​ such a market as that of any other occupation, in terms of demand and supply of labour. Economic theory demonstrates that when demand for a product rises, so too does that of its labour and hence wages – which seems to be the case in the prostitution market. The creation of a wage differential, especially between the urban and rural sphere, creates a strong incentive for low-skilled, rural women to enter the market. Indeed, Ellis ​(1936)​ denotes the incomparable wage gains for women in prostitution that easily rivals those in typical, menial jobs. Noting that domestic workers barely make a living wage in Thailand, earning approximately $8 per day ​(Dunn, 1994)​ and highlighting that sex work earned six times that of other unskilled work ​(Nagaraj & Yahya, 1998) the​ economic incentive for prostitution seems paramount for the young, rural woman. Yet, her rationale for entrance into the market may be compounded when considering the wider context of household debt and poverty traps in rural Thailand.  

1.     Lack of educational opportunity  

The continuation of unequal gender expectations combined with traditional views resulting in the commodification of girls contributes to the limited economic potential of female labour in Thailand. As impoverished parents tend to selectively send their children to school, it is typically the daughters who are relegated to domestic responsibilities, thus contributing to limited educational access and levels of literacy despite the attempts of government legislation. Their lack of skills hence results in restricted employability, demanding entrance into low-skilled, low-paying jobs. As such, girls become vulnerable to the exploitation and allure of the sex industry, incentivising their entrance, and in the long-term, hindering their chances of leaving. ​(Hung, 2024)​  

2.     Social Norms  

In a familial-based rural society, cultural norms dictate the role of daughters to provide economic support to younger siblings and parents. Indeed, continued income remittance from urban to rural regions highlights how prostitutes’ incomes are essential to supplement schooling, healthcare bills, and home building for poor, rural families ​(Phongpaichit, 1982).​This economic support is necessary to prevent absolute rural poverty.  

However, since households place a greater weight on the role of prostitutes’ incomes being used simply for household consumption as opposed to human capital investment such as education and health, there remains a long-term dependence of rural families upon the working woman, thus confining her to the sex industry in the long-term.  

3.     Normalisation of prostitution in rural communities  

As a result of the lucrative gains accrued from prostitution, returning sex workers to rural regions often exhibit a lifestyle of luxury and material wealth, which further magnetises younger girls in poverty to the industry. A study in the US for example, concluded that 40% of women described prostitution as a normal activity in their neighbourhoods, denoting its perception as glamorous, and a means of earning quick money ​(Cobbina & Oselin, 2011).​This is also reflected in Thailand (Brody, 2006), where the desire for access to commercial gain funded by prostitution extends to the families too. A notable case of this is in the Dok Kham Tai district where local agents bribed parents with property, household goods, and money in exchange for their daughters. Many used their daughters as collateral for cash loans, which reinforces the influence of poverty traps in predetermining occupational outcomes for rural Thai girls. Such recurrence and continued exportation of women from the region therefore resulted in the ubiquitous label of ‘ladies of Dok Kham Tai’ across Thailand ​(Rueankham, 2023)​. Thus the normalisation of prostitution in rural societies, supplanted by individual wants contributes to the mindset of “Sister follows sister. Neighbour follows neighbour.” (​Phongpaichit, 1982​, p.76). A cycle of poverty and prostitution in rural Thailand is entrenched and likely to remain, exploiting the vulnerability of young, uneducated, and impoverished women who seek the low-skilled and seeming high-return of informal jobs.  

 To combat the expansion of the industry, the Thai government has historically chosen the legislative path. Most recently, the 1996 Prevention and Suppression of Prostitution Act established a THB1000 – 2000 (≈ USD30) fine for street solicitations, rehabilitation services, and prosecution of underage sex workers and trafficking. Yet, the policy has arguably been a failure. The crackdown on brothels and known sex work institutions resulted not in a decline in prostitution as intended by legislation, but rather an enlargement of informal venues, with girls working in bars and cocktail lounges instead (Sorajjakool, 2003). Indeed, despite the fall in number of prostitutes in large cities like Bangkok and Chiang Mai, the legislation did not translate into a significant change in number of arrests (Khruakham & Lawton, 2010), hence implying a wider cause for the inability to regulate the industry in Thailand, corruption. Policemen taking bribes contributed to the unaccountability and unenforceability of the policy, which softened the deterrent effect required in legislation ​(Sorajjakool, 2003).​ As such, a consideration of alternative policy paths are outlined:  

First, the decriminalisation of prostitution. Though this is likely to be unfavoured politically and socially when considering the relatively conservative cultural views of sex among Thais, there are significant theoretical gains from legalising prostitution. For sex workers, a formalisation of this informal industry would enable them to access the same labour protection and benefits accrued in the formal sector, notably healthcare, benefits, and legal protection. Given the health risks associated with sex work, like AIDS and STIs, state intervention on testing may be the most viable solution ensuring a broader protection of public health. The position in support of decriminalisation therefore, emphasises the importance of granting economic independence and equality for sex workers comparable to formal sector workers, while acknowledging further the importance of state regulation in preventing exploitation and propagation of risk in the industry.  

             Yet, one could argue against this legislation from an economic perspective. As fear of prosecution falls, there is a reduced barrier to their consumption, thus contributing to an increase in client demands. Similarly, the removed deterrent effect could influence a rise in supply as workers enter the market without fear of prosecution. Liberalisation would therefore likely come at a cost to public health.  Cho et al. ​(2013)​ evaluates the impact of decriminalisation on market reactions to conclude a widening of not only the prostitution, but also sex trafficking market as well.   

Therefore, the theoretical proposition of decriminalisation seems unlikely. The extent to which such policy would work depends on the degree of strict regulation and enforcement of good labour practices to prevent exploitation. Considering the comparatively weak institutional strength in Thailand, especially concerning the informal sex industry, alternative policy may be more viable.  

For example, Raymond ​(2003)​ proposes the use of a tax on clients of prostitution. A hypothecated tax on consumption at the point of sale, defined as a tax whose revenue is designated for a specific purpose, could be implemented. Noting its effect on deterring demand and providing government revenue, the tax could be used to fund programmes targetting female education provision and increasing their employment alternatives and opportunities.  Provision of more equal and robust education could improve occupational outcomes and, in the long-term inhibit the continued cycle of rural-urban migration, prostitution, and poverty. Simultaneously, the revenues could be used by the government to implement mandatory health checks, screening for HIV and other STIs.

 There remain complexities with this policy though. Namely, the necessity of a flat percentage tax. As a flat rate percentage tax, the deterring effect could reduce consumption, and hence market demand for services. Though this may limit the deterrent effect felt by higher-grade brothels (those that charge steeper prices and attract wealthier patrons), implying the continuation of exploitation - by placing greater emphasis on the relatively larger supply of low-grade brothels, and therefore the more significant risk on public hygiene, a regressive flat rate would be more beneficial. Practically, there is further benefit by minimising administrative costs. In application, the tax will ultimately depend upon political feasibility and require significant enforcement strength for its success. 

Prostitution has long been established as an occupation which is intrinsically placed in our society. It is important to consider the ways in which policymakers can regulate an occupation which can easily facilitate negative spillover effects in the country including that on health, drugs, and international crime. In Thailand, the sex industry has provided economic potential to both the individual and the nation, though the future should look towards policy solutions which protect the vulnerable who are unwillingly funnelled into the sector. Looking forwards, the most effective policy controlling the adverse effects of prostitution in the nation seems to be the tax on clients of prostitution. Placing weight on the gained revenues to fund programmes increasing female agency, equality, and opportunity, policymakers could reduce the cycle trapping young girls into the industry, hence moving away from previous inefficient legislation and towards long-term human capital development instead. 

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References:  

​​​​Brody, A. (2006). Prostitution in Thailand: perceptions and realities. In G. Gangoli & N. Westmarland (Eds.), International approaches to prostitution: Law and policy in Europe and Asia (Online, pp. 185–207). Policy Press Scholarship Online. https://doi.org/10.1332/policypress/9781861346728.003.0010  

​Cho, S.-Y., Dreher, A., & Neumayer, E. (2013). Does Legalized Prostitution Increase Human Trafficking? World Development, 41, 67–82. https://doi.org/10.1016/j.worlddev.2012.05.023  

​Cobbina, J. E., & Oselin, S. S. (2011). It’s Not Only for the Money: An Analysis of Adolescent versus Adult Entry into Street Prostitution. Sociological Inquiry, 81(3), 310–332. https://doi.org/10.1111/j.1475-682X.2011.00375.x  

​Dunn, C. (1994). The politics of prostitution in Thailand and the Philippines : policies and practice (86).  

​Edlund, L., & Korn, E. (2002). A Theory of Prostitution. Journal of Political Economy, 110(1), 181–214. https://doi.org/10.1086/324390  

​Ellis, H. (1936). Studies in the Psychology of Sex (Vol. 4). Random House.  

​Hung, J. (2024). Legalising Prostitution in Thailand. Springer Nature Singapore. https://doi.org/10.1007/978-981-99-8448-0  

​Nagaraj, S., & Yahya, S. R. (1998). Prostitution in Malaysia. In Lin Lean Lim (Ed.), The Sex Sector: The Economic and Social Bases of Prostitution in Southeast Asia. International Labour Office.  

​Phongpaichit, P., & International Labour Organisation. (1982). From peasant girls to Bangkok masseuses (2). International Labour Organisation.  

​Raymond, J. G. (2003). Ten Reasons for Not Legalizing Prostitution And a Legal Response to the Demand for Prostitution . Journal of Trauma Practice, 2, 315–332.  

​Rueankham, K. (2023). Made in Phayao: Negative stories about “Dok Kham Tai girls” that do not fit into the current era. Lanner Editor. Available at: https://www.lannernews.com/27122566-02/ [Accessed 22 Nov 2024]  

​Sorajjakool, S. (2003). From Coercion to Personal Decision: Changing Forms of Child Prostitution. In Child Prostitution in Thailand:Listening to Rahab (pp. 15–23). The Haworth Press.