The economics of sex trafficking

The New Yorker has a thoughtful but heart-wrenching piece on the international sex traffiking industry (and the fight to stop it).

Migrant smuggling is different from trafficking. Migrants pay smugglers to deliver them, illegally, to their destinations.

The line into trafficking is crossed when coercion and fraud are used. (This line is not always clear, and many migrants endure varying degrees of mistreatment.)

Trafficking can start with a kidnapping. More commonly, it starts with a broken agreement about a job promised, conditions of work, or one’s true destination. Most victims suffer some combination of threats, violence, forced labor, and effective imprisonment.

As the story unfolds, what emerges is a stomach-churning economic model of exploitation.

The business model for human trafficking in the former Soviet Union has been described by Louise Shelley, a professor of public policy at George Mason University, as a “natural resource” model, which treats women purely as a source of short-term profits, like timber or furs, to be sold to intermediaries.

Another model, used by Chinese organized-crime groups and dubbed by Shelley “trade and development,” takes a longer view. This model is integrated, controlling the flesh trade from recruitment through brothel management. It cultivates relationships with villages, which can share in the profits, and can be, relatively speaking, less brutal.

There are also harsher regional models, such as the wartime system of sex slavery that developed in the Balkans in the nineteen-nineties (or the experience of Japan’s “comfort women,” in the thirties and forties).

The focus of the story is Moldova, the poorest country in Europe, which has a per-capita income nearly as low as Sudan’s. “One of the few local growth industries is travel agencies,” we’re told “firms that promise to get you abroad, legally or otherwise, often for a large fee.”

The problem is that traffickers are masquerading as such firms to lure in victims:

One estimate, accepted by the I.O.M., is that between one and two per cent of all Moldovan migrants may find themselves trafficked at some point. An unworldly, underemployed young person considering a vaguely dubious job offer overseas would probably not be stopped from migrating by those odds. Add desperate poverty and an unhappy household—the standard “push factors”—and the pipeline of likely trafficking victims out of Moldova never runs dry.

The victims, moreover, are not caught completely aware:

Few people in Moldova today can say that they weren’t warned. Internationally funded campaigns to heighten awareness of the dangers of being trafficked have succeeded, according to follow-up polls, in reaching nearly every Moldovan.

Still, the counterpropaganda—seductive media images of life abroad, but also hard evidence of the wealth to be earned there—is stronger. Remittances from migrants, many sent through the country’s ubiquitous Western Union offices, are estimated by the World Bank at more than a billion dollars annually, financing consumption that, by local standards, is stunning.

So each attempt to migrate illegally is a desperate gamble. One wonders, though, why legitimate agencies don’t attempt to earn and promote good reputations (and profit from them). Also, why are attempts to fool would-be migrants (such as forcing former captives to pretend they had a pleasurable experience) so successful? This information asymmetry is a little hard to believe, but clearly it persists.

One suggestion is that the traffickers target adolescent girls, who are most easily tricked and cajoled. Psychologically-speaking, there is some evidence that adolescents, with their still-developing brains, have more difficulty planning over long horizons, and are more easily coerced and influenced.

What is chilling is the similarity of this story to the patterns and organization of child abduction we observed in northern Uganda (and wrote about here). I’m working with a colleague on a game theoretic model of coercion and violence in labor contracts, with applications to rebel groups and child soldiering. The object is to understand the systems and incentives and decisions better, ultimately to help eradicate the problem. Maybe we need to think more broadly.

I suspect that a better mapping of the business models, and a deeper appreciation of the incentives and industrial organization of the trafficking industry, could challenge how we think about combating such criminals, and help reduce the terrible crime.

Someone should take this up. If I can study child soldiers, and if others can get a paper on pirate organization into the Journal of Political Economy, you might be able to pull off a trafficking study for a dissertation.