The purpose of this essay is to analyze the economic factors behind the supply of children
engaged in child prostitution in Thailand. Children are recruited to the sex industry either
by parents, adults in their immediacy or choose it themselves. There are several factors that
contribute to pushing children towards prostitution. Many of these factors such as credit
constraints and mortality are related to poverty, the most quoted of economic factors behind
the supply of child prostitution. Associated to poverty is the high discount rate which
means that people prioritize present over future consumption. In combination with a lack
of alternatives, this makes people engage in risky activities such as prostitution. This also
seems to be the case in Thailand.
To analyze the different alternatives faced by children in Thailand, a calculation of present
value of life time wages of the alternative activities a child faces was computed. The computation
of present value of life time wages of alternative activities of children in the face
of different discount rates is in line with economic theory and shows that education confers
the highest reward unless the discount rate is extremely high. If education is unavailable,
as it is for unregistered children in Thailand, or discount rates are very high, as it can be
for very poor families, prostitution will be the occupation with the highest returns.