One of the advertised advantages of legalizing prostitution is that it should reduce illegal human trafficking. The theory is that customers will favor legal over trafficked prostitutes, thus reducing demand for the latter. Yet, legalization may also raise overall demand for prostitution. This increase in the size of the market may lead to more trafficking even if most customers prefer legal prostitutes.
Seo-Young Cho, Axel Dreher, and Eric Neumayer find in a recently published article in World Development that this latter effect dominates empirically: countries that legalized have larger reported inflows of human trafficking than similar countries where prostitution is illegal. They also found this effect in a more detailed study of Sweden, Germany and Denmark, which changed their prostitution laws.
Eric Neumayer reflects on some of the implications and caveats of the study here, including the difficult data issues that are inherent to a study like this. It may be difficult for customers to distinguish legalized from trafficked prostitution, perhaps partially because prostitution is not always fully legalized. There may also be benefits of legalization for working conditions. Yet, the point that legalizing prostitution can make consumption more desirable (or acceptable) to a broader audience (and lead to negative consequences) strikes me as both plausible and important. Perhaps there is something to be said for the Swedish policy, which makes it illegal to buy sexual services but not to sell them. As Eric Neumayer points out:
The number of human trafficking victims in 2004 in Denmark, where it is decriminalised, was more than four times that of Sweden, where it is illegal, although the population size of Sweden is about 40 per cent larger.