How institutions affect workers' well-being: An international study of differences in the gender pay gap, rates of return to education, and workers' incomplete information on wages

This dissertation attempts to examine cross-country variations in three labor market outcomes---the gender pay gap, rates of return to education, and the incomplete information for workers. Two steps are taken in investigating each of these topics: First, the value of labor market outcome is calculated for each country-year. Second, country characteristics and labor market institutions are employed to explain the emerging cross-country patterns.; The gender pay gap chapter complements the current cross-country studies using the human capital approach. Theory predicts that higher incentives for lifetime labor force participation causes women to invest more in human capital so that the gender pay gap will decrease. The fertility rate, the age gap between husband and wife at the first marriage, the top marginal income tax rate, and the female relative educational attainment are employed to measure women's incentive. The results show that higher incentives of female labor force participation represented by lower values in the first three variables and higher value in the last variable lead to smaller gender pay gaps.; The chapter on returns to education focuses on trade and skill-biased technical change to explain cross-country differences in the returns. It finds that increased imports of labor-intensive (skill intensive) goods reduce relative payoff to domestic unskilled workers (skilled workers) and raise (reduce) returns to education. Meanwhile, larger values of the use of computer and the extent of high technology exports raise the returns as a result of greater demands for high skills.; The last chapter gathers cross-country evidence supporting the effects of search behavior on employee incomplete information on maximum wage offers. Workers in countries that strongly support unemployment insurance receive wages closer to their potential. A more dense population reduces search costs, thereby leading to less incomplete information. A more industrial economy disseminates wage information better, so that workers exhibit less incomplete information and higher wages. Finally, foreign worker inflows increase incomplete information, and at the same time reduce average wage levels.