Slavery Versus Labor

94 Pages Posted: 4 Oct 2021 Last revised: 12 Oct 2021

See all articles by Giuseppe Dari‐Mattiacci

Giuseppe Dari‐Mattiacci

University of Amsterdam; Tinbergen Institute

Guilherme de Oliveira

Amsterdam Center for Law and Economics; Tinbergen Institute

Date Written: October 1, 2021


Slavery has been a long-lasting and often endemic problem across time and space, and has commonly coexisted with a free-labor market. To understand (and possibly eradicate) slavery, one needs to unpack its relationship with free labor. Under what conditions would a principal choose to buy a slave rather than to hire a free worker? First, slaves cannot leave at will, which reduces turnover costs; second, slaves can be subjected to physical punishments, which reduces enforcement costs. In complex tasks, relation-specific investments are responsible for high turnover costs, which makes principals prefer slaves over workers. At the other end of the spectrum, in simple tasks, the threat of physical punishment is a relatively cheap way to produce incentives as compared to rewards, because effort is easy to monitor, which again makes slaves the cheaper alternative. The resulting equilibrium price in the market for slaves affects demand in the labor market and induces principals to hire workers for tasks of intermediate complexity. The available historical evidence is consistent with this pattern. Our analysis sheds light on cross-society differences in the use of slaves, on diachronic trends, and on the effects of current anti-slavery policies.

Keywords: Slavery, Labor, Turnover costs, Carrots, Sticks

JEL Classification: D86, J47, K31, N30

Suggested Citation

Dari-Mattiacci, Giuseppe and de Oliveira, Guilherme, Slavery Versus Labor (October 1, 2021). accepted in Review of Law and Economics, Amsterdam Law School Research Paper No. 2021-30, Amsterdam Center for Law & Economics Working Paper No. 2021-08, Available at SSRN: or

Giuseppe Dari-Mattiacci (Contact Author)

University of Amsterdam ( email )

Postbus 15654
1001 ND
Amsterdam, Noord-Holland 1001 ND

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA

Guilherme De Oliveira

Amsterdam Center for Law and Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB

Tinbergen Institute ( email )

De Boelelaan 1105
Amsterdam, 1081 HV

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