Why does education pay off? Relations between institutional context and the mechanisms by which education pays off in the labor market

In this dissertation, we investigate how the institutional context influences the importance of three mechanisms that explain the educational payoff in the labor market: productivity enhancing skills, positional good, and social closure. While a large body of literature studies the effects of institutional context on the strength of the education effect, and much has been written on the mechanism(s) by which education pays off, these two literatures are rarely combined. Just as the literature on mechanisms has developed largely without reference to the institutional context, so too has the research on cross-country variation in the education effect developed largely without reference to the mechanisms by which education yields a high return on investment. The central goal of this dissertation is to bridge both literatures and propose a new framework to study the influence of the institutional context on the importance of the mechanisms by which education pays off in the labor market.