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Literacy Traps: Society-wide Education and Individual Skill Premia

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Author Info
Atal, Vidya () (Cornell University)
Basu, Kaushik () (Cornell University)
Gray, John () (Cornell University)
Lee, Travis () (Cornell University)

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Abstract

Using a model of O-ring production function, the paper demonstrates how certain communities can get caught in a low-literacy trap in which each individual finds it 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.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4047.

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Length: 19 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4047

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Related research
Keywords: education; literacy; O-ring; skill formation; traps;

Find related papers by JEL classification:
D20 - Microeconomics - - Production and Organizations - - - General
I28 - Health, Education, and Welfare - - Education - - - Government Policy
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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This page was last updated on 2009-11-23.

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