Abstract
The redemption system transformed the American auction of immigrant servants. The potential for exploiting immigrants was created by search restrictions in the redemption auction. A model of the auction was estimated using 4,455 German and British servant contracts. Average servant compensation equaled resident free labor compensation, and the variance in servant compensation was systematically related to the variance in servant productivity, contract restrictions, and work amenities. Competition among buyers overcame the search restrictions placed on immigrants in the redemption auction.

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