Street Prostitution Zones and Crime Paul Bisschop Stephen Kastoryano∗ Bas van der Klaauw April 30, 2015 Abstract This paper studies the effects of introducing legal street prostitution zones on both reg- istered and perceived crime. We exploit a unique setting in the Netherlands where legal street prostitution zones were opened in nine cities under different regulation systems. We provide evidence that the opening of these zones was not in response to changes in crime. Our difference-in-difference analysis using data on the largest 25 Dutch cities between 1994 and 2011 shows that opening a legal street prostitution zone decreases registered sexual abuse and rape by about 30% − 40% in the first two years. For cities which opened a legal street prostitution zone with a licensing system we also find significant reductions in drug crime and long-run effects on sexual assaults. For perceived crime, perceived drug nuisance increases upon opening but then decreases below pre-opening levels in cities with a licensed prostitution zone. In contrast, we find permanent increases in perceived drug crime in the areas adjacent to the legal prostitution zones. Our results do not show evi- dence of spillover effects on crime associated to human trafficking organizations. Keywords: Prostitution, Crime, Sexual Abuse, Rape, Drugs, Regulation. JEL-code: J16, J47, K14, K23, K42. ∗Stephen Kastoryano (corresponding author), University of Mannheim, IZA, e-mail:
[email protected]; Paul Bisschop, SEO Economic Research, e-mail:
[email protected]; Bas van der Klaauw, VU University Amsterdam, IZA, Tinbergen Institute, e-mail:
[email protected] Thanks to Sander Flight, Wim Bernasco, Jan van Ours, Hessel Oosterbeek, Erik Plug, Joop Hartog, Mich`eleTertilt, Rei Sayag and Thomas Buser for valuable comments.