Primary Sources in Early America

Migration and Human Capital: Self-Selection of Indentured Servants to the Americas

Author(s): Ran Abramitzky and Fabio Braggion

Source: The Journal of Economic History , Dec., 2006, Vol. 66, No. 4 (Dec., 2006), pp. 882-905

Published by: Cambridge University Press on behalf of the Economic History Association

Stable URL: https://www.jstor.org/stable/4501107

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Migration and Human Capital. Self-Selection ofIndentured Servants

to the Americas

RAN ABRAMITZKY AND FABIO BRAGGION

When contracting, European merchants could at least partially observe character- istics such as the health, physical strength, and education of indentured servants. These characteristics, unobservable to us, were likely to influence servitude dura- tion, which is observable to us. We employ a switching regression model to ana- lyze 2,066 servitude contracts from the seventeenth and eighteenth centuries. Servants were positively selected to American mainland colonies in terms of their unobservable human capital and negatively selected to the West Indies. Thus, the relative quality of migrants' human capital may have played a role in the subse- quent relative economic performance of these regions.

Throughout the colonial period, indentured servitude was an impor- tant form of white migration to the New World. Abbot Emerson

Smith and Farley Grubb suggested that roughly half of the white immi- grants who arrived to the American colonies used indentured servitude contracts.' These contracts, under which emigrants would become servants in the colonies, enabled them to finance their trip to the New World.

We focus on servitude migration and examine whether the mainland and the West Indian colonies attracted migrants with different endow- ments of human capital as early as the seventeenth and eighteenth cen- turies. Although the literature looks at the characteristics of servants bound for various colonies as they appear in the surviving records, most aspects of servants' human capital such as education, experience, health, and physical strength are not currently observable and, thus, were not analyzed.2 We infer these unobservable aspects of human capi-

The Journal of Economic History, Vol. 66, No. 4 (December 2006). C The Economic History Association. All rights reserved. ISSN 0022-0507.

Ran Abramitzky is Assistant Professor, Department of Economics, Stanford University, Lan- dau Economics Building, 579 Serra Mall, Stanford, CA 94305-6072. E-mail: ranabr@stanford. edu. Fabio Braggion is Assistant Professor of Finance, Tilburg University and CentER, Faculty of Economics and Business Administration, P.O. Box 90153, 5000 LE Tilburg, The Nether- lands. E-mail: [email protected].

We are grateful to Martin Bodenstein, Timothy Bresnahan, Marco Da Rin, Adeline Dela- vande, Joe Ferrie, Avner Greif, Nisan Langberg, Joel Mokyr, Kathy Spier, Luis Vasconcelos and Gavin Wright for their helpful discussions and suggestions. We would like to thank Jeremy Atack and two anonymous referees for their comments and suggestions. All remaining errors are ours.

SSmith, Colonists; and Grubb, "Incidence." 2 Galenson, White Servitude, pp. 91-96. Servants' ability or inability to sign his contract was

recorded, but this is a rough measure of education.

882

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Migration and Human Capital 883

tal by noting that they could be observed at the time of contracting and were likely to influence servitude duration, which is observable to us. We can therefore econometrically test the relations between unobserv- able characteristics affecting the servitude duration and destination choices.

More specifically, migrants who were expected by the European mer- chants to be more productive received shorter terms of servitude.3 Al- though migrants had choice and so selected themselves to a destination, the duration of the servant contracts offered by merchants per migrant characteristics for different destinations influenced the migrants' choice. Thus, to the extent that individuals who migrated to a certain colonial destination persistently received shorter terms of servitude than their observable characteristics imply, we conclude that they were positively selected in terms of characteristics that are currently unobservable.4 Mi- grants who had to serve a longer term than their observable characteris- tics imply were negatively selected.

Following David Galenson, we restrict our sample to nonadult ser- vants because of uncertainty over the role that unrecorded cash pay-

ments may have played in altering adult servant contract duration.5 We analyze two important collections of English registrations of indentured servants, the two for which enough detailed information has survived to allow our econometric analysis, namely the indentures of 162 contracts from Middlesex County between 1682 and 1685 and the indentures of 1904 contracts from London between 1718 and 1759.

We employ a switching regression model (type five tobit) and esti- mate the length of servitude expected by an individual with certain characteristics in both the mainland and the West Indian islands, taking into account the endogeneity of that individual's migration decision.6 Migrants are assumed to choose their colonial destination based on fac- tors such as their age, gender, literacy, county of origin and the length of the contract expected in each location, which is itself a function of individual's observable and unobservable characteristics.

We find that servants bound to the West Indies were negatively se- lected in the sense that, ceteris paribus, they served half a year more

3 Galenson, "Market Evaluation" and White Servitude; and Grubb, "Auction." 4 On the self selection of migrants, see, for example, Borjas, "Self Selection" and "Econom-

ics"; and Chiswick, "Is the New Imigration" and "Are Immigrants." 5 According to Galenson, White Servitude, the full conditions of the contract for young ser-

vants were recorded and the duration of servitude appears to be the main variable. For adult ser- vants, cash payments at the end of the term were an important contractual clause, but they were rarely recorded.

6 The colonial destination was a major choice variable of prospective servants, Pitman, De- velopment; Smith, Colonists; Galenson, "Market Evaluation" and White Servitude; and Sheri- dan, Sugar.

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884 Abramitzky and Braggion

than predicted by their observable characteristics. Conversely, servants migrating to the mainland were positively selected in the sense that they had to serve over half a year less than predicted by their observable characteristics. Notably, the regression analysis suggests that servants' characteristics that are currently unobservable were more important de- terminants of servitude duration than observable characteristics such as

occupation, literacy, and gender. The nature of human capital selection of immigrants to the Carib-

bean islands and to what later became the United States may suggest the importance of human capital in their subsequent distinct eco- nomic development. Despite a higher initial income per capita in the islands compared to the mainland, by the nineteenth century the United States was well on its trajectory of sustained economic growth while the Caribbean islands lagged far behind. Economists and economic historians have explored the role of factor endowments

and initial distinct institutions in explaining this divergence.7 The finding of this article reveals that the colonies in these regions had, early on, attracted migrants with different endowment of human capi- tal. To the extent that the destination selectivity by human capital that we found here can be generalized to other migrants, then this sug- gests the potential importance of the relative quality of migrants' human capital in the subsequent relative economic performance of these regions.8 In finding that, this article lends support to the work of Edward Glaeser, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer that suggests that the different human capital brought by immigrants to the New World may have been important in the subsequent development of good institutions and economic develop- ment.9 It may nevertheless be the case that the selection we find re- flects distinct geographical endowments.

"UNOBSERVABLE" DETERMINANTS OF SERVITUDE DURATION

Our main argument relies on the presence of servants' characteristics unobservable to researchers now but observable to and rewarded by the

7 For example, Engerman and Sokoloff, How Latin America and "Colonialism"; Acemoglu, Johnson, and Robinson, "Colonial Origins" and "Reversal"; and Acemoglu, Johnson, Robinson and Thaicharoen, "Institutional Causes."

SFor the impact of human capital on economic growth, see, for example, Becker, Murphy, and Tamura, "Human Capital"; Galor and Weil. "Population"; Lucas, "On the Mechanism"; and Mankiw, Romer and Weil, "Contribution." Schultz, "Value," emphasizes the role of human capital in the efficiency of reallocation of resources after economic shocks. Shastry and Weil, "How Much"; and Weil, "Accounting for the Effect," show the importance of health in the cross country variation of income. Becker, Murphy, and Tamura, "Human Capital."

9 Glaeser, La Porta, Lopez-de-Silanes and Shleifer, "Do Institutions."

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Migration and Human Capital 885

European merchants who shipped the servants to the New World and sold their contracts once there. In what follows, we describe these char- acteristics and outline their potential importance in determining servi- tude duration.

First, healthier and stronger servants may have received shorter terms of servitude, as they were better suited to the physically demanding work of growing, processing, and transporting the sugar, tobacco, or rice; packing and shipping the staple; building houses and farm sheds; and so on. Besides, the stronger and healthier were more likely to sur- vive the long and exhausting trip to the Americas. Thus, servants de- termined by the merchants to be healthy and strong are expected to have received a shorter length of servitude in the colonies.

Health and physical strength are not observable to us today but were to some extent observable by European merchants and American plant- ers. Grubb considers convict servants and constructs a proxy of physical strength and health by using servants' heights.1' He finds that the price of convict servants in the auctions of Maryland between 1767 and 1775 was 20 percent higher for exceptionally tall servants concluding that the higher price was the result of planters' concern about servant' physical conditions." Grubb's finding is also confirmed by anecdotal evidence. There is evidence that planters walked among convict servants arriving

to the ports, inquiring their trade, examining them like horses and inter- viewing them. When a servant named John Lauson was asked for his trade, he answered that he was a cooper. The planter replied that "That will not do for him" and continued the interview. Lauson later recalled that:13

Some felt our hands other our legs and feet, And made us walk to see were compleat Some view'd out Teeth to see if they was good, And fit to Chaw our hard and homely food

The health of servants was the main concern of merchants and planters. As reported by Bernard Bailyn:

10 Grubb, "Market Evaluation." Data on servants' heights are not indicated in the available in-

formation on voluntary servants used in this work. " Grubb defines exceptionally tall servants as those servants whose height was one standard

deviation above the average height of male British convict servants in Maryland between 1767 and 1775. The secular and cross-sectional differences in human heights have been used by eco- nomic historians as measures of nutritional quality, physical strength, and well-being of indi- viduals. See Steckel, "Stature."

12 Lauson, Felon's Account, p. 8. 13 Ibid.

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886 Abramitzky and Braggion

the dominant concern is clear in the pages of the merchants' letter books. The seller [of servants] were haunted, above all else, by the fear of disease. Every- thing depended on the health of their charges, which was unpredictable and un- controllable.14

Moreover:

the first concern, at the receiving end of the process as at the sending, was thus always health: the best markets were for the "young, healthy, and not de- formed"-a concern reflected in innumerable newspaper advertisements an- nouncing the recent arrival and pending sale of "healthy servants-men, women, and boys." Only slightly less weighty was the stress on occupations and skills."5

Second, correspondence between merchants and planters suggest that planters were looking for servants who were laborious and industrious men, characteristics which merchants could potentially detect but are un- observable to the econometrician.16 By the late seventeenth century and eighteenth century, planters increasingly requested servants who not only

possessed a skill, but had good character and were good in their profes- sion, which are again characteristics that cannot be observed today. Thus, in 1732, a Glasgow merchant wrote to a correspondent to send tradesmen to servitude, but be sure that none but good tradesmen be indentured.17 Similarly, a Bristol merchant was advised by Samuel Martin in 1757 to send him "A good jobbing Sadler & Collar maker who understands tan- ning & dressing leather for his own use" or "A sober Jockey who is a good rider & breaker of young horses. Of this man you must insist upon a good Character for Sobriety & skill in his profession; because generally speaking they are a drunken profligate breed of people."18

Whether a servant was indeed skilled in his profession could be eas- ily detected by planters, thus it made sense for the merchant to verify servants' qualities as best as he could. A planter from Virginia who found out that he was misled by a servant, wrote in his diary in 1758:19

Sent home the fellow sent here for a gardiner. He knows nothing of the matter. Plowman ... I keep. He seems a workman and willing fellow.

Third, characteristics such as education, skill, ability, entrepreneurial and managerial skills are important determinants of individuals' produc-

14 Bailyn, Voyagers, p. 330. 15 Bailyn, Voyagers, pp. 330-31. 16 Christopher Jeaffreson writing to his London merchant in 1677; quoted in Galenson, White

Servitude, p. 134. 17 Quoted in Galenson, White Servitude, p. 135. s18 Quoted in Galenson, White Servitude, p. 136. 19 Quoted in Galenson, White Servitude, p. 137.

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Migration and Human Capital 887

tivity, and thus potentially important determinants of servitude duration. These characteristics probably gained importance over time. By the late seventeenth century, the demand for skilled servants increased and ser- vants were often employed as slave supervisors, which meant that ser- vant's qualities such as high ability, ambition, and managerial skills must have been sought for and rewarded by shorter length of servitude. Once again, merchants who dealt with the trade of servants had an in- centive to identify such qualities.

Even the observable surviving measures of skill and experience are rough and incomplete. The merchants, by inspecting, examining and in- terviewing prospective servants, must have had a better sense of the education of a prospective servant than indicated by his ability to sign. Similarly, work experience must have been conveyed better from ser- vants to merchants than is captured by a servant's age, which is the only indication for experience available in the registrations. A servant's oc- cupation, observable to us today, may indicate his skill, but we cannot see how good a carpenter, or cooper, or shoemaker he was. We also cannot observe how motivated and ambitious he was, and we cannot asses from the surviving data his ability to supervise slaves. The mer- chants must have been able to evaluate a servant's productivity better.

A MODEL OF DESTINATION CHOICE

Unlike African slaves, many Europeans migrated voluntarily in the hope of improving their lives. For those who financed the trip using the indentured contract, a main contractual clause was the colonial destina- tion. Abott Smith noted that:

... most striking of all evidences is that which shows servants preferring one colony over another . .. in one way or another, whether by published literature or by word of mouth, a certain amount of sound knowledge and honest opinion got about among prospective emigrants concerning the relative excellencies of various colonies.20

Based on his characteristics, each prospective servant could compare the conditions of the indentured contract in each colony and the expected prospects of various colonies, and choose his preferred destination. In our main analysis, prospective servants are assumed to choose between serv- ing in a mainland colony and serving in a West Indian colony.21

20 Smith, Colonists, pp. 57-58. 21 A second specifications allow servants to have three choices, namely mainland southern

colonies, mainland northern colonies, and the West Indies. Because the results are very similar and for ease of presentation, we present here only the binary choice model. Results from the three-choice specification are available from the authors upon request.

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888 Abramitzky and Braggion

Formally, we employ a switching regression model (type five tobit) that allows for two regimes (in our case migrate to the American mainland or migrate to the West Indies), a criterion function (a migra- tion rule that determines the regime) and two regression equations de- scribing the length of the servitude determination in the mainland and in the West Indies. This framework has been used to study migration, re- turns to schooling, and the way joining unions effects wages.22

Assume that an individual chooses his colonial destination, D , based on the difference between the servitude length in the mainland and the West Indies, LA - LiwI, as well as other individual characteris- tics that may affect one's taste for location, Zi

Di* = 6~Z, + 82[LiA - L,wI] + u (1)

where E(uj) = 0 and var(ui) is normalized to one without loss of general- ity. For every person, we either observe the length of the servitude in the mainland LiA if the servant migrated to the American mainland or

the length of servitude in the West Indies LiwI if he migrated to the West Indies. We do not observe the counterfactual length of term that a mi- grant to, say, the mainland would have served had he chosen the West Indies colonies instead. Note, however, that the length of the servitude reflects a servant's expected productivity, which can be written as a function of his observable personal characteristics Xi affecting expected productivity

Lu = PjX + Eiu (2) where j = WI,A and E(eO ) = OVj, var(eiA) = a22, var(eiwi) = a3.

Thus, if we can estimate the parameters /A and &I, then given a ser- vant's set of characteristics X1, we can predict the length of the servitude

in the mainland (West Indies) for actual migrants to the mainland (West Indies) as well the counterfactual length of servitude in the mainland (West Indies) for those who migrated to the West Indies (mainland).

An important fact to note is that actual migrants may not constitute a

random sample, so that E (LA D =1) = X~ + E (A D =1) and

E (L,I D = 0) = wX, + E (Ew, D = 0) and an OLS regression might produce biased estimators. The terms E (eA D = 1) and

22 On migration, see Robinson and Tomes, "Self-Selection"; and Ferrie, Yankeys. On returns to schooling, see Willis and Rosen, "Education." On unions and wages, see Lee, "Unionism."

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Migration and Human Capital 889

E(ew1 I D = 0) captures migrants' characteristics unobservable to the econometrician that are persistently correlated with the length of servi- tude. For instance, stronger and healthier individuals could choose to migrate to the mainland, and merchants potentially rewarded their strength and health with a shorter term of servitude. The econometri- cian, not being able to observe strength and health, will omit an impor- tant variable from his OLS regression and produce biased estimators. To properly estimate the model requires correcting the estimation for possible self-selection.

Intuitively, the econometrician can check whether servants' unob- servable characteristics from their migration decision are correlated with the duration of servitude. If the unobservable characteristics from

the migration decision are consistently associated with a longer duration of servitude, then migrants are negatively selected (e.g., they are weaker and less healthy). If, on the other hand, the unobservable characteristics from the migration decision are consistently associated with a shorter duration of servitude, then migrants are positively selected (e.g., they are stronger and healthier).

Formally, the servant's decision ruleD/* is unobservable, but his choice between the mainland, D = 1, and the West Indies, D = 0, is ob- servable

D = 1 if D =- ,Zi + 6 2 [LiA - LI] + ui ~=y + E 0 1 3) D = 0 if D,9 = Zi + S2[LiA - Lw,] + u, = 'W + 0 (3)

where Wi is observable and contains all the elements of X and Z.23 To capture the dependence between individuals' migration decisions and their duration of servitude, and assuming that (ei, EiA, EiWI) are distributed Trivariate Normal, it follows that:24

E (LW, I D = 0) = fXi + 013 ((4) S1-4o(y'Wj)

23 We are presenting a switching regression model, with endogenous switch, Maddala, Lim- ited Dependent and Qualitative Variables, p. 223. Although the distributional assumptions used in the analysis are standard, they are strong and might have substantial effect on the estimation. Heckman, "Varieties"; Manski, "Nonparametric Bounds"; and Newey, Powell, and Walker, "Semiparametric Estimation."

24 (Ei, iA, ' iW) are assumed to have the following covariance matrix

a? "12 "13 2U 2 23

r 1

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890 Abramitzky and Braggion

where 0 is the Normal pdf, D represents the Normal cdf, and

- (y'w ) I - (D(r"mi)

is the inverse mill ratio.25 The term

13- O(y'Wj) is the

magnitude of the self-selection of migrants to the West Indies, i.e., it is the magnitude of the effect of unobservable (to us today) characteristics of migrants to the West Indies on their servitude duration.26

Notice the difference between compensating differentials across colo- nies and servants' selection to the different colonies. The compensating differentials reflect differences in the quality of various colonies and are captured by the difference in the constants (between the mainland and West Indies) of regression. The servants' selection reflects differences in the quality of servants bound to the different colonies and is captured

by the term 13 for the West Indies and 23 -(y'W) for

the mainland.

The vector X includes individual characteristics thought to influence the length of servitude in the colonies: age, ability to sign, gender, oc- cupation and the season when the contract was signed. The elements of Z include age, ability to sign, gender and the servants' county of origin (see Appendix A for the definitions of counties). The parameters are identified under the restrictions imposed by the model.27 To identify 61

and 32, there must be at least one variable in X not in Z and vice versa. Both conditions are satisfied: Z includes variable not included in X-the

county of origin, and X includes variables not in Z-the season of de- parture and the occupation category, which are assumed to affect the

25 We are adopting here an identification assumption traditionally used in the literature of self selection (see Heckman and Sedlaceck, "Heterogeneity"): the proportionality assumption. Dif- ferences in the evaluation of unobservable characteristics between locations are captured in the constant term of the regression. Therefore, the coefficient on the inverse mill ratio just captures a pure supply effects determined by the relative capabilities of servants arriving to the colonies, and does not reflect different evaluation of unobservable characteristics in different markets.

26 In the same way, the expected length of servitude in the mainland is

E (LA D= 1)= AXi + 23 W) OD(y Wi)

and the term 23 W) 1- I(7 Wi)

represents the magni-

tude of the self selection of migrants to the mainland. 27 Note that the reduced form Probit (column 1 of Table 1 and Table 2) and the servitude du-

ration equations (columns 3 and 4 in Table 1 and Table 2) are not affected by the exclusion re- strictions of X and Z. However, the estimation of the structural Probit (column 2 of Table 1 and Table 2) does depend on the exclusion restrictions, which are required for identification. Under the exclusion restriction, a variable in X that is not in Z, such as the occupation variable, is in- terpreted as having an effect on the destination choice only through its effect on the servitude duration, but no direct effect on the destination choice.

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Migration and Human Capital 891

migration decision only through their effect on the servitude duration. Several works show pattern of chain migration from a certain British area to a certain colonial region: we therefore find reasonable that county of origins was a strong determinant of the destination choice.28 On the other hand, there is no reason to believe that just being from a certain county would have had an independent and separate effect on contracts' length. We rely on the work by Grubb and Tony Stitt to con- clude that season of departure affected the period of servitude rather than destination choice.29 Similarly, Smith and Galenson show that cer- tain types of occupations were appreciated by colonial planters and po- tentially they could have received better terms of servitude.30

The structural parameters of the binomial model were estimated via a three-step procedure.31 First, the reduced form equation is estimated by Probit maximum likelihood estimation to find yf. Then, using yf, we ob-

tain the Inverse Mill Ratio for each observation: O<ffi. ID (ffi

Second, equa-

tion (for both the West Indies and the mainland) is estimated by OLS.

That is, we run an OLS regression of LiA on Xi and (y, I)

and get

/jA and LiA. Third, equipped with LjA and Liwi, we estimate the structural

decision equation to find the determinants of colonial choice, and de- termine whether or not migrants were expecting shorter servitude in their destination choice.32

THE DATA SETS

Our data sources are the two most important and informative surviv- ing lists of servants registrations from the seventeenth and eighteenth centuries.33 The first is a list of 823 servants recorded in Middlesex

28 Bailyn, Voyagers; and Horn, "'To Parts"' and Adapting to a New World. 29 Grubb and Stitt, "Liverpool Emigrant Servant Trade," computed correlations between co-

lonial destinations and month of departure and did not find any clear pattern. 30 Smith, Colonists; and Galenson, White Servitude. 31 See Maddala, Limited Dependent and Qualitative Variables, pp. 223-28; and Amemiya,

Advanced Econometrics, pp. 399-402. 32 The standard errors of the r) coefficients have been corrected (using bootstrap method with

1,000 repetitions) for the fact that the regressor is an estimated, rather than observed, value. 33 Four other collections of servants recorded in Bristol (1654-1686), London (1683-1686,

1773-1775), and Liverpool (1697-1707) survived, but they lack information that is crucial to our analysis, as variables such as age, literacy, occupation, and the servitude duration were often not recorded. The Bristol Collection is transcribed in Coldham, Bristol Registers. The London collection is reported by Ghirelli, List; and the Liverpool register is reported by French, List.

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892 Abramitzky and Braggion

County between 1682 and 1684.34 The second is a list of 3,182 servants recorded in London between 1718 and 1759.35 Both lists contain de-

tailed information of the servitude contract, including the name, date of departure, gender, age, occupation, ability to sign, county of origin, co- lonial destination, recruiter's name, and length of servitude, that allow us to analyze prospective servants' migration decisions and the deter- minants of the servitude duration.

Our analysis is more meaningful when the full terms of the contract were recorded and when the length of servitude, rather than cash payments, was the main contractual clause. According to Galenson, this was not the case for adult servants, i.e., those over 21 years old, but was the case for minor servants.36 More specifically, for adult servants, cash payments were probably the main contractual clause but unfortunately, they were rarely recorded for adults. There is little variation in the length of servitude in adult contracts and four years of servitude appears to have been the norm.37

For minor servants, on the other hand, cash payments were consistently re-

corded but were rarely made. The length of servitude was the main source of variation in the contracts of minor servants. Thus, our analysis focuses on minors, which leaves us with 162 observations in the Middlesex sam- ple, out of which 86 individuals migrated to the mainland and 76 to the West Indies, and 1,904 observations in the London sample, out of which 1,087 moved to the mainland and 817 to the West Indies.

There is substantial amount of missing information in these records, most of which is occupation information. More than half of the minors did not have a recorded occupation. There is a debate regarding the in- terpretation of missing recorded occupations.38 Whereas Mildred Campbell argues that servants with missing occupation constituted a random sample of the servant population, Galenson holds that those without recorded occupation indeed did not have any professional

34 The data on servants who left from the port of the Middlesex county, 1682-1684, were re- trieved from microfilms of the original indenture records entitled Plantation Indentures and cre- ated by the London Metropolitan Archives. The original records can be found in the Middlesex Guildhall, in the United Kingdom, and they are also reported in Nicholson, Some Early Emi- grants; and Wareing, "Some Early Emigrants."

35 The data used for servants who departed from London, 1718-1759 come from microfilms of the original records, entitled Agreements to Serve in America and can be found at the Guild- hall, London. This source was transcribed by Kaminkow and Kaminkow, List; and Galenson, "Agreements."

36 Galenson, White Servitude.

37 Galenson, White Servitude, found that for minors, cash payments were recorded when made (in fewer than 6 percent of the contracts) and were almost always made to servants bound for four years. Because most adults were bound to serve for four years and because adults rarely appear to have served less than four years, Galenson concluded that for adults cash payments substituted for reduction of servitude below four years.

38 See Galenson, White Servitude, pp. 39-64, for a detailed discussion.

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Migration and Human Capital 893

skill.39 We consider two specifications, one of which excludes the occu- pation variable from the analysis, and the other treats missing occupa- tion as if the servant had no occupation. We report results from the lat- ter specification, but results from the former specification are qualitatively the same.40

ESTIMATION RESULTS

Our estimation results are presented in Table 1 for the Middlesex sample of 1682-1684 and in Table 2 for the London sample of 1718- 1759. The estimation results of the determinants-of-migration equations are presented in the first and second columns of both tables.41 The first column of Tables 1 and 2 shows results from the reduced-form Probit

regression (D = 1 if y Wi + ei > 0 and D = 0 otherwise), where the choice of destination is determined by individuals' observable characteristics Wi that contain both variables in Xi and in Zi, as well as by individuals' unobservable characteristics ei. The second column of Tables 1 and 2

shows results from the structural Probit (D = 1 if D -= 61Zi + 62[LiA -

Liwi] + ui > 0 and D = 0 otherwise), where the choice of destination is determined by individuals' observable characteristics Zi, as well as by the difference in expected duration of servitude in each destination and an unobservable component ui. The results from estimating the servi- tude duration equations in the mainland and in the West Indies are pre- sented in the third and fourth columns, respectively.

Migrants' Selection to Colonial America

John Riley was nineteen years old when he left Britain in the summer of 1722 to St. Christopher in the West Indies. He signed his indentured contract with a merchant named Christopher Veale from Shoreditch, Middlesex. Riley did not have a recorded occupation, but he could sign his indenture contract. Given Riley's observable characteristics (gender, age, occupation, literacy, and season of departure), our model predicts that he should have served in the West Indies for a little over three and a

half years. However, Riley's indentured contract assigned him five years of servitude, indicating that some factors that are unobservable to us prolonged his period of servitude.

Had Riley gone to the mainland, our model predicts that he would have served an even longer term, which reflects compensating differentials

39 Campbell, "Social Origins." 40 Results from the second specification are available from the authors upon request. 41 Description of the variables is reported in the Appendix.

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894 Abramitzky and Braggion

TABLE 1

MIDDLESEX SAMPLE: ESTIMATION RESULTS

(1) (2) (3) (4) Servitude Servitude

Reduced Structural Duration Duration Form Probit Probit West Indies Mainland

Constant 9.023** 16.97***

(3.902) (1.41) Lus - Lw1 -0.456

(0.500) Age -0.083** -0.202*** -0.245 -0.515***

(0.035) (0.033) (0.182) (0.058) Ability to sign -0.042 -0.086 -0.211 -0.391**

(0.103) (0.101) (0.172) (0.188) Gender -0.114 0.019 -0.192 -0.495**

(0.241) (0.192) (0.197) (0.239) County of origin Northern -0.184 -0.039

(0.164) (0.156) North central -0.129 -0.020

(0.186) (0.158) Western -0.073 0.112

(0.205) (0.149) Southern -0.105 0.037

(0.182) (0.160) Season of departure Fall or winter 0.087 0.402** -0.684

(0.119) (0.153) (0.541) Summer 0.702*** 0.153 -1.693**

(0.066) (1.257) (0.817) "Skilled" occupation 0.443** -0.042 -0.599

(0.086) (0.535) (0.411) No occupation 0.322** 0.223 -0.086

(0.126) (0.283) (0.236) Mill ratio 0.009 -0.935*

(0.801) (0.482) R2 0.35 0.71 LR chi2 88.33 66.67 N 162 162 76 86

Note: For variable definitions, see the Appendix.

between the mainland and the West Indies. At the same time, William Tayler possessed the same observable characteristics as Riley, and he left Britain in the same summer as Riley and even signed his contract with the same merchant (Christopher Veale). Tayler headed to Mary- land and was assigned to serve there for only four years. Although Tayler and Riley possessed the same observable characteristics, Tayler had unobservable characteristics such as health or physical strength that shortened his servitude whereas Riley had unobservable characteristics that prolonged his servitude.

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Migration and Human Capital 895

TABLE 2

LONDON SAMPLE: ESTIMATION RESULTS

(1) (2) (3) (4) Servitude Servitude

Reduced Structural Duration Duration Form Probit Probit West Indies Mainland

Constant 9.862*** 11.589***

(0.576) (0.322)

Lus - Lwi 0.054 (0.098) Age -0.029*** -0.036*** -0.323*** -0.332***

(0.008) (0.007) (0.021) (0.021) Ability to sign -0.084*** -0.079*** -0.006 -0.082

(0.024) (0.025) (0.065) (0.068) Gender 0.178*** 0.199*** -0.130 -0.269**

(0.045) (0.048) (0.165) (0.136) County of origin

Northern -0.135*** -0.136***

(0.040) (0.039) North central -0.071* -0.070***

(0.045) (0.044) Western 0.011 0.007

(0.044) (0.043) Southern 0.044 0.032

(0.037) (0.037) Scotland -0.177*** -0.186***

(0.056) (0.056) Ireland 0.012 0.019

(0.078) (0.079) Season of departure Winter -0.037 0.038 0.152*

(0.041) (0.095) (0.089) Fall -0.171*** 0.139 0.245**

(0.039) (0.107) (0.115) Summer -0.110*** -0.060 -0.003

(0.041) (0.101) (0.103) "Skilled" occupation 0.088*** -0.092 -0.218**

(0.034) (0.077) (0.097) No occupation 0.013*** -0.021 0.150

(0.030) (0.076) (0.094) Mill ratio 0.553** -0.903***

(0.237) (0.320) R2 0.39 0.44 LR chi2 143.53 100.77 N 1,904 1,904 817 1,087

Note: For variable definitions, see the Appendix.

We now turn to the regression analysis that formalizes and general- izes these examples. As shown in the third and fourth columns of both samples, the coefficients on the inverse Mill ratio are positive and big for servants bound to the West Indies in the latter sample and negative and big for servants bound to the mainland in both samples. These re-

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896 Abramitzky and Braggion

sults indicate that servants migrating to the West Indies were negatively selected and servants migrating to mainland colonies were positively se- lected.42 More specifically, our estimation suggests that in both the sev- enteenth and eighteenth centuries, an average servant who migrated to the mainland served about half a year less than predicted by his observ- able characteristics. A servant bound to the West Indies in the eight- eenth century served half a year more than his observable personal characteristics would indicate.43

The difference in the constant terms suggests that, when abstracting from personal characteristics, servitude was shorter in the West Indies than in the mainland. This reflects the higher general desirability of the mainland over the West Indies. The positive and negative coefficients on the Mill ratios (columns 3 and 4) imply that, abstracting from the compensating differentials, there was a negative selection of servants to the West Indies and a positive selection to the mainland.44

The strong selection effects imply that in the seventeenth and eight- eenth centuries, people who were of higher quality-as observed by their contemporaries but not by us-preferred mainland destinations over the West Indies colonies and that those who had lower unobserv-

able qualities were more likely to migrate to the West Indies. These findings are consistent with the historical evidence, which highlighted the fact that migrants to the West Indies were "lazy useless sort of peo- ple ... ," and that mainland colonies offered more attractive opportuni- ties for talented servants than did West Indies destinations.45

42 When allowing a servant to choose between northern and southern colonies in the mainland, positive selection of servants to southern colonies such as Virginia and Maryland ap- pears to be stronger compared to northern colonies. Moreover, the results are robust to the in- clusion of the price of sugar in England.

43 Moreover, we find that the unobservable characteristics varied with gender and literacy. In particular, the unobservable qualities of men were better than those of women (i.e., the term

o (7 W) is, on average, bigger for men than for women) in both the United States and the l-CF(y Wi)

West Indies. For example, whereas an average men served in the mainland seven months less than his observable characteristics indicate, women only served four months less than suggested by their characteristics. In the West Indies, men served five months longer than suggested by their observable characteristics, compared to seven months for women. Similarly, literate indi- viduals seem to have brought with them better unobservable qualities than illiterate individuals.

44 The result is robust to the inclusion of year of departure, and birth cohort of the servant (constructed as year of departure minus age of the servant). On the distinction between selection and compensating differentials, see, for instance, Goddeeris, "Compensating Differentials."

45 Pitman, Development, p. 52. Continental colonies are believed to have provided better oppor- tunities than West Indies for talented individuals. Smith noted that in continental colonies: "there

was always a scarcity of labor; always land to be had; always a decent livelihood to be won by those who had the qualities necessary to win it. Thus the freed servant with his new clothes and his small stock of corn need never have lacked for employment. If he desired land and independence he could acquire them in time, even if not immediately on his freedom" (Colonists, p. 293).

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Migration and Human Capital 897

In terms of selection patterns over observable characteristics, our analysis shows (as reported in Tables 1 and 2, column 1) that servants who were more skilled (defined as carpenters, blacksmiths, spinsters, weavers, and shoemakers) were more likely to move to America's mainland. In the case of

the London sample this result is in contrast with that reported by Galenson:

according to his analysis skilled servants were more likely to migrate to the West Indies.46 The reason for this difference lies both on the definition of

skill and on the different methodologies employed: whereas Galenson com- putes the rough proportion of skilled servants in each colonial destination, we control in our regression for other servants' personal characteristics.

However, both Galenson's analysis and ours suggest that individuals who could sign their names were more likely to migrate to the West In- dies rather than to the mainland.47

It is interesting to notice that the selection over unobservable charac- teristics had a larger effect on the length of servitude than the ability to sign or occupation.48 This may either suggest the limited information contained in the observable variables as measures of education and

skills or reflect the relative importance of characteristics such as health and physical strength that we cannot currently observe and measure.

Returns to Human Capital

Galenson estimates returns to human capital in the seventeenth and eighteenth centuries by joining observations for the West Indies and the

Hector St. John de Crevecoeur, in his Letters from American Farmer published in 1782, writes that: "there is room for every body, in America. Has he any particular talent, or industry? he exerts it in order to procure a livelihood, and it succeeds ... Is he a laborer, sober and indus- trious? he need not go many miles, nor receive many informations before he will be hired, well fed at the table of his employer, and paid four or five times more than he can get in Europe" (Smith, Colonists, p. 292).

According to Smith, West Indian colonies "presented no such satisfactory prospects. Except- ing Jamaica they were all of small size, and it was not long before the land was taken up." Ser- vants to the West Indies were described as "Artificers and Laborers that come from Europe, that soon grow lazy and Indolent." They were "Runagadoes and a loose sort of people" (Pitman, Development, p. 54). The English governor commented that a servant arriving to the West In- dies were "a lazy useless sort of people who come cheap and serve for deficiencies and their hearts are not with us" (Pitman, Development, p. 54). Smith asserts that "it is plain that no intel- ligent and informed man or woman would emigrate to the West Indies as a servant after the first years of settlements were over... No doubt there were some good servants, and some success- ful careers even in the eighteenth century, but we must look upon the white servant in the West Indies generally as being unfortunate individual, prized mainly for the color of his skin, unable to find work, apt even to conspire with slaves, a tragic outcast in the colonial world" (Smith, Colonists, p. 295).

46 Galenson, White Servitude, pp. 91-95. 47 Galenson, White Servitude. 48 The results of the probit estimation are robust to the inclusion of year of departure and birth

cohort.

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898 Abramitzky and Braggion

American mainland.49 It is implicitly assumed that the determinants of servitude duration are the same in both locations. Our econometric analy- sis of equation 2 reveals that the returns to human capital differ across co-

lonial destinations. In particular, during the period covered by our analy- sis, age was on average more rewarded in the mainland than in the West Indies. Servants' skills were more important determinants of the servitude

duration in mainland colonies than in the West Indies, especially in the eighteenth century. Servants who were occupied in the Old World in more skilled occupations as carpenters, blacksmiths and spinsters, served about three months less than other servants in the mainland, but got simi- lar terms in the West Indies. Women appeared to have been more valued in the mainland than they were in the West Indies.50o

Our results are consistent across the seventeenth- and eighteenth- century samples. In both samples we find compensating differentials such that, abstracting from personal characteristics, servitude was longer in the mainland compared to the West Indies. Women received a shorter period of servitude in the mainland in both the seventeenth and eighteenth centuries. In the seventeenth century, age was more valued in the mainland colonies than in the West Indies, but in the eighteenth cen- tury this gap disappeared.

Notice that our estimators of the determinants of servitude duration

are not directly comparable with Galenson's.5' In particular, Galenson analyzes a pooled regression and places fixed effects on a thin selection of colonial destinations to measure compensating differentials.52 In our analysis the colonial destination is an endogenous variable, and thus it is not taken as given. In order to have a more powerful test of selection, we group the destinations in two broader categories: West Indies and American mainland.53 In our analysis the compensating differentials on colonial destinations can be measured by looking at the differences in the constants of the two human capital evaluation equations. Another difference between our analysis and Galenson's is that whereas Galen- son has dummy variables for each age group, we introduce a linear rela- tionship between the servitude's duration and age (results are robust for

49 Galenson, White Servitude, pp. 104-05.

50 Galenson suggests two possible reasons for the wage premium received by women. The first is that the demand for them was higher due to shortage of wives for colonists (women con- stituted less than 6 percent of emigrants in this sample), and the second is that women might have been more productive in certain household jobs (such as nursing and cooking) that were demanded by colonists.

5s Galenson, White Servitude, pp. 104-05.

52 The subdivision that Galenson makes of colonial destinations is the following: Antigua, Barbados, Jamaica, Other West Indies, Maryland, Virginia, Other mainland.

53 In another specification, we divide American mainland between Northern colonies and Southern colonies. Our results are robust to this specification.

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Migration and Human Capital 899

including age squared). Despite the differences, our results of the esti- mation of the returns to human capital are qualitatively similar to Galenson's. That is, in both colonial destinations and in both the seven- teenth and eighteenth centuries, we find that older servants had to serve a shorter period to repay their debt, women served shorter periods than men, and whereas literate individuals served a shorter period in the sev- enteenth century, literacy did not have a substantial effect on servitude duration in the eighteenth century.

DISCUSSION AND CONCLUSIONS

During the seventeenth century, the West Indian colonies were con- sidered the richest regions of the Americas. At the beginning of the eighteenth century, Barbados's per capita income was 50 percent higher than the per capita income of the American mainland.54 By the begin- ning of the nineteenth century, however, the situation was reversed with the mainland colonies overtaking the Caribbean colonies.

The current research attempting to explain this different patterns of economic development has focused on the role of factor endowments and institutions. The debate has concentrated on which of the two fac-

tors has played a more important role. One perspective emphasizes that geography is the principal factor determining economic development.55 A second perspective lays emphasizes that institutions are the determi- nants of long run economic development.56 The geographic and institu- tional views are not mutually exclusive: geographical location can shape institutions, which, in turn, affect economic performance. In the context of the British colonies in the New World, Stanley Engerman and Kenneth Sokoloff describe how the different geographical envi- ronments of the American colonies, by favoring one type of crop over another, determined the degree of inequality displayed by each colonial society and the quality of institutions constituted.57

In contrast, by emphasizing the different quality of human capital ar- riving in various colonies, this article points out the possible importance of migrants' human capital in explaining the different patterns of eco-

54 Engerman and Sokoloff, "Institutions."

55 Diamond, "Guns"; Gallup, Sachs, and Mellinger, "Geography"; and Sachs, "Tropical Un- derdevelopment."

56North, Structure; North, Summerhill, and Weingast, "Order"; Hall and Jones, "Why Do Some Countries"; Acemoglu, Johnson and Robinson, "Colonial Origins" and "Reversal"; Acemoglu, Johnson, Robinson and Thaicharoen, "Institutional Causes"; and Rodrick, Subrama- niam and Trebbi, "Institution Rule."

57 Engerman and Sokoloff, "Factor Endowment," "Institutions," and "Colonialism." Acemo- glu, Robinson, Johnson, "Colonial Origins" and "Reversal," also account for the effects of ge- ography on institutions.

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900 Abramitzky and Braggion

nomic development in the two regions." More specifically, our analysis indicates that both in the seventeenth and in the eighteenth centuries, mi-

grants to the West Indies were negatively selected and migrants to the mainland were positively selected in terms of their unobservable charac- teristics such as ability, motivation, ambition, physical strength and health. These features were associated with half a year reduction of servi- tude in the mainland and half a year increase of servitude in the West In- dies. If the type of destination selectivity by unobserved (to us) human capital characteristics that we found for indentured servants can be gener-

alized to other migrants, then this process may have contributed to the relative difference in economic development across regions in the Ameri- cas. In this sense, our analysis provides further support to the work of Glaeser et al., who have studied economic growth performance for a set of developed and developing countries between 1870 and 2000 and have shown that human capital is a fundamental determinant of the develop- ment of good institutions and a strong predictor of economic growth.59

Although the extent and size of the importance of human capital in ex- plaining the different patterns of economic development in the two re- gions is a topic for future research, we suggest here three possible chan- nels through which human capital may have affected the divergence between the economic development of the mainland and the West Indies.

First, human capital and education have a direct impact on economic growth and an indirect impact on economic development through their effect on institutions.60 The only observable measures of skill that sur- vived to our times are whether or not a servant could sign his contract and his occupation. The unobservable qualities detected by our analysis capture aspects of servants' education and general skills observed by the master that could have an important influence on economic activities. Under this perspective, better unobservable characteristics might have affected differently the economic growth and the development of insti- tutions of the West Indies and the mainland.

Second, as already discussed, health may be an important part of the unobservable characteristics in our analysis. Recent research suggests that between 10 percent and 29 percent of the share of the actual cross

58 Our analysis does not reveal whether good servants may have been attracted to the mainland because of its geography and natural endowment or because the mainland already had better institutions early on. Nevertheless, given our findings, the various explanations of the di- vergence of the two regions should take into account the divergence in the quality of human capital these regions attracted.

59 Glaeser, La Porta, Lopez-de-Silanes, and Shleifer, "Do Institutions." 60 For the direct impact, see Becker, Murphy, and Tamura, "Human Capital"; Galor and Weil.

"Population"; Lucas, "On the Mechanism"; and Mankiw, Romer, and Weil, "Contribution." For the indirect impact, see Glaeser, La Porta, Lopez-de-Silanes, and Shleifer, "Do Institutions."

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Migration and Human Capital 901

country variance in log-income per workers is explained by variation of health.61 It is reasonable to conjecture that similar results would hold in seventeenth- and eighteenth-century economies mainly characterized by agricultural production, where the health of human actors played an im- portant role in determining performance.

Third, the unobservable characteristics may consist of servants' en- trepreneurial skills, which can contribute to facilitate the adoption of new technologies and the construction of good institutions. Starting from the work of Lowell Ragatz, an important stream of historiography on the British Caribbean colonies depicts the West Indies as a techno- logically conservative environment.62 Planters were overcommitted to crops that exhausted the soil, and they would not adopt best practice techniques when available. Many of them did not live any more in the islands and left the management of the plantations to incapable and dis- honest managers. Historians also recognized the West Indies as a sys- tem incapable of organizing institutions that contributed to economic growth.63 In particular it was noticed that being "the white settlers, mostly young male, and drawn from a low grade set of people," with only a few gentlemen leaders and "no substantial number of those mid- dling Englishmen and Chesapeake societies" constructed bad institu- tions and a general lifestyle that lacked moral and intellectual values. The extent of the failure of West Indian planters is still an object of de- bate, but the historiography on the matter points out that Caribbean colonies were an environment technologically more conservative than the mainland colonies.64

In contrast, American mainland colonies had an environment more receptive of technology adoption. Alan Olmstead and Paul Rhode, for instance, show how cotton planters in the early nineteenth century were actively engaged in matching the technology and the environment.65 They were engaged in systematic research for better seed varieties ca- pable of producing high crops yields. This activity was conducted by the planters themselves and required an enormous amount of curiosity, motivation, and entrepreneurial skills.66

61 Shastry and Weil, "How Much"; and Weil, "Accounting for the Effect." 62 Ragatz, Fall.

63 Bridenbaugh and Bridenbaugh, No Peace; and Dunn, "Sugar." 64 For a re-evaluation of the role of the planters in the West Indies see Green, "Planter";

Sheridan, Sugar; and Ward, "Profitability." 65 Olmstead and Rhode, "Wait a Cotton Pickin' Minute!" 66 Notice, however, that this example may be a consequence of the good people arriving a

century earlier, or simply another outcome of whatever it was that made good people want to go to the mainland.

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902 Abramitzky and Braggion

Appendix: Variable Definitions Variable Description

Gender Woman = 1; Man = 0 Ability to write Sign = 1; Mark = 0 Winter, spring, summer, fall Indicated season = 1; otherwise = 0 American colonies

Mainland Pennsylvania, New Jersey, New York, New England, Georgia, Maryland, North Carolina, South Carolina, Virginia

West Indies Antigua, Barbados, Jamaica, St. Christopher, Santa Lucia English counties

Northern Yorkshire, Cheshire, Northumberland, Cumberland, Westmorland, Durham, Lancashire, Derbyshire, Nottinghamshire

North Central Northamptonshire, Leicestershire, Norfolk, Rutland, Hintingtonshire, Lincolnshire

Central Buckinghamshire, Norfolk, Suffolk, Cambridgeshire, Surrey, Bedfordshire, Middlesex, Kent, Hertfordshire, Warwickshire, Essex, Oxfordshire, Berkshire

Western Gloucestershire, Shropshire, Herefordshire, Wales, Staffordshire, Worcestershire

Southern Dorset, Cornwall, Hampshire, Sussex, Somerset, Wiltshire, Devonshire

"Skilled" occupations Carpenter, blacksmith, spinster, weaver, shoemaker = 1; otherwise = 0

No Occupation No occupation indicated = 1; otherwise = 0

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