Literacy Traps: Society-Wide Education and Individual Skill Premia
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.
MSU Digital Commons Citation
Atal, Vidya; Basu, Kaushik; Gray, John; and Lee, Travis, "Literacy Traps: Society-Wide Education and Individual Skill Premia" (2010). Department of Economics Faculty Scholarship and Creative Works. 33.