Title

Literacy Traps: Society-Wide Education and Individual Skill Premia

Document Type

Article

Publication Date

10-6-2010

Abstract

Using a model of an O-ring production function, the present paper demonstrates how certain communities can get caught in a low-literacy trap in which each individual finds that it is not worthwhile investing in higher skills because others are not high-skilled. The model sheds light on educational policy. It is shown that policy for promoting human capital has to take the form of a mechanism for solving the coordination failure in people's choice of educational strategy.

DOI

10.1111/j.1742-7363.2009.00126.x

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