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The market evaluation of human capital: The case of indentured servitude

Galenson, David W. (1981) The market evaluation of human capital: The case of indentured servitude. Journal of Political Economy, 89 (3). pp. 446-467. ISSN 0022-3808.

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This paper examines the market for human capital created by the institution of indentured servitude in colonial America. The indenture system allowed English emigrants to obtain passage to the colonies by selling claims on their future labor. With the size of the debt approximately equal for all emigrants, the length of the term for which a servant was bound is predicted to have varied inversely with expected productivity in the colonies. Analysis of two collections of contracts made in the seventeenth and eighteenth centuries supports the prediction. Age, skill, and literacy were negatively related to length of indenture. Women received shorter terms than men at young ages, while servants bound for the West Indies and those bound in periods of high colonial demand for labor also received reductions.

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Additional Information:© 1981 by the University of Chicago. I am grateful to Stanley Engerman for discussions of many of the issues treated in this paper and comments on an earlier draft. I would also like to thank Andrew Abel, Gary Becker, Lance Davis, Robert Fogel, Richard Freeman, Russell Menard, Frederic Mishkin, Melvin Reder, Sherwin Rosen, T. W. Schultz, George Stigler, and participants in seminars at Columbia University, the University of Chicago, the University of Illinois, the Newberry Library, the University of Southampton, and the 1980 Cliometrics Conference for their suggestions and comments. Formerly SSWP 316.
Subject Keywords:Human capital, Indentured servitude, Productivity, Contracts, Cash payments, Coefficients, Literacy, Labor demand, Political economy, Market prices
Issue or Number:3
Record Number:CaltechAUTHORS:20171120-135914461
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83352
Deposited By: Jacquelyn Bussone
Deposited On:20 Nov 2017 22:09
Last Modified:03 Oct 2019 19:05

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