No help with evidence here, but a thought:
This sort of argument is generally made in favor of globalization and other such economic arrangements. However, is it actually a real dichotomy? In the context of an extremely globalized world in which developed nations have the economic clout to extract labor at ridiculously low prices, closing any individual sweatshop-factory is on the margin going to push people into worse poverty. That sort of economic system is not the only option, however, and actions to end that system potentially produce outcomes better than 'prostitute' or 'sweatshop worker'.
If we increase globalization, we can save money, which means we can donate more money, which means that we can do more to generally increase the conditions in third world countries.
I've been looking for reliable evidence of a claim I've heard a few times. The claim is that the closing of sweatshops (by anti-globalization activists) has resulted in many of the child workers becoming prostitutes. The idea is frequently proffered as an example of do-gooder foolishness ignoring basic economics and screwing people over.
However, despite searching for a while, I can't find anything to indicate that this actually happened.
Some guy at the Library of Economics and Liberty mentions it here:
But in the article, Paul Krugman mentions the Oxfam study without citation:
I looked at some Oxfam stuff, but couldn't find the study.
A similar claim is made in The Race to the Top: The Real Story of Globalization by Tomas Larsson (go here and use the search tool for the word 'prostitution'), but doesn't mention the Oxfam study:
I looked for a paper or something by Maskus but came up empty.
I was taught this fact at a Poli Sci class in college, but I'm starting to think it's more likely to be an information cascade. Can anyone do a better job than me?
Thanks in advance.