IDEAS home Printed from https://ideas.repec.org/a/bla/ijethy/v6y2010i1p137-148.html
   My bibliography  Save this article

Literacy traps: Society‐wide education and individual skill premia

Author

Listed:
  • Vidya Atal
  • Kaushik Basu
  • John Gray
  • Travis Lee

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.

Suggested Citation

  • Vidya Atal & Kaushik Basu & John Gray & Travis Lee, 2010. "Literacy traps: Society‐wide education and individual skill premia," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(1), pages 137-148, March.
    • Handle: RePEc:bla:ijethy:v:6:y:2010:i:1:p:137-148
    DOI: 10.1111/j.1742-7363.2009.00126.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1742-7363.2009.00126.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1742-7363.2009.00126.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Kremer & Edward Miguel & Rebecca Thornton, 2009. "Incentives to Learn," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 437-456, August.
    2. Azam Mehtabul, 2010. "India's Increasing Skill Premium: Role of Demand and Supply," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-28, October.
    3. Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 73-96, February.
    4. Richard Arnott & Bruce Greenwald & Ravi Kanbur & Barry Nalebuff (ed.), 2003. "Economics for an Imperfect World: Essays in Honor of Joseph E. Stiglitz," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012057, December.
    5. W. Davis Dechert & Kazuo Nishimura, 2012. "A Complete Characterization of Optimal Growth Paths in an Aggregated Model with a Non-Concave Production Function," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 237-257, Springer.
    6. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
    7. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 551-575.
    8. Rauch James E., 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities," Journal of Urban Economics, Elsevier, vol. 34(3), pages 380-400, November.
    9. Jean Drèze & Geeta Gandhi Kingdon, 2001. "School Participation in Rural India," Review of Development Economics, Wiley Blackwell, vol. 5(1), pages 1-24, February.
    10. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
    11. Benjamin F. Jones, 2008. "The Knowledge Trap: Human Capital and Development Reconsidered," NBER Working Papers 14138, National Bureau of Economic Research, Inc.
    12. Roland Benabou, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 619-652.
    13. Mukul Majumdar & Tapan Mitra, 1995. "Patterns Of Trade And Growth Under Increasing Returns: Escape From The Poverty Trap," The Japanese Economic Review, Japanese Economic Association, vol. 46(3), pages 207-223, September.
    14. Arnott, Richard J. & Greenwald, Bruce & Kanbur, Ravi & Nalebuff, Barry, 2003. "Joseph Stiglitz and Economics for an Imperfect World," Working Papers 127202, Cornell University, Department of Applied Economics and Management.
    15. Majumdar, Mukul & Mitra, Tapan, 1982. "Intertemporal allocation with a non-convex technology: The aggregative framework," Journal of Economic Theory, Elsevier, vol. 27(1), pages 101-136, June.
    16. Redding, Stephen, 1996. "The Low-Skill, Low-Quality Trap: Strategic Complementarities between Human Capital and R&D," Economic Journal, Royal Economic Society, vol. 106(435), pages 458-470, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gerhard Toews & Alexander Libman, 2017. "Getting Incentives Right: Human Capital Investment and Natural Resource Booms," Working Papers 370, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    2. Vidya Atal, 2017. "Say at home, or stay at home? Policy implications on female labor supply and empowerment," Review of Economics of the Household, Springer, vol. 15(4), pages 1081-1103, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Steven N. Durlauf & Ananth Seshadri, 2003. "Is assortative matching efficient?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 475-493, March.
    2. Alonso Villar, Olga, 1996. "El papel de la educación en la aglomeración urbana," DE - Documentos de Trabajo. Economía. DE 3375, Universidad Carlos III de Madrid. Departamento de Economía.
    3. Battisti, Michele, 2017. "High wage workers and high wage peers," Labour Economics, Elsevier, vol. 46(C), pages 47-63.
    4. Ken-Ichi Akao & Takashi Kamihigashi & Kazuo Nishimura, 2015. "Critical Capital Stock in a Continuous-Time Growth Model with a Convex-Concave Production Function," Discussion Paper Series DP2015-39, Research Institute for Economics & Business Administration, Kobe University.
    5. Black, Duncan, 1999. "Local Knowledge Spillovers and Inequality," ERSA conference papers ersa99pa409, European Regional Science Association.
    6. William Easterly & Ross Levine, 2002. "It´s Not Factor Accumulation: Stylized Facts and Growth Models," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.),Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 3, pages 061-114, Central Bank of Chile.
    7. Ettore Damiano & Hao Li & Wing Suen, 2010. "First In Village Or Second In Rome?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(1), pages 263-288, February.
    8. Gradstein, Mark, 2019. "Misallocation of Talent and Human Capital: Political Economy Analysis," CEPR Discussion Papers 13574, C.E.P.R. Discussion Papers.
    9. Dimaria, Charles-Henri & Le Van, Cuong, 1998. "Debt, corruption, R&D and growth in developing countries," CEPREMAP Working Papers (Couverture Orange) 9817, CEPREMAP.
    10. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    11. Gerald A. Carlino, 2014. "New ideas in the air: cities and economic growth," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 1-7.
    12. Jellal, Mohamed, 2014. "Education private and social returns an optimal taxation policy," MPRA Paper 57190, University Library of Munich, Germany.
    13. Luis Garicano & Thomas N. Hubbard, 2016. "The Returns to Knowledge Hierarchies," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(4), pages 653-684.
    14. Takashi Kamihigashi & Santanu Roy, 2006. "Dynamic optimization with a nonsmooth, nonconvex technology: the case of a linear objective function," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 325-340, October.
    15. Zeng, Jinli & Zhang, Jie, 2022. "Education policies and development with threshold human capital externalities," Economic Modelling, Elsevier, vol. 108(C).
    16. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 489-530.
    17. Josef Falkinger & Volker Grossmann, 2003. "Workplaces in the Primary Economy and Wage Pressure in the Secondary Labor Market," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(3), pages 523-544, September.
    18. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    19. Helsley, Robert W. & Zenou, Yves, 2014. "Social networks and interactions in cities," Journal of Economic Theory, Elsevier, vol. 150(C), pages 426-466.
    20. Gabriel M. Ahlfeldt & Stephen J. Redding & Daniel M. Sturm & Nikolaus Wolf, 2015. "The Economics of Density: Evidence From the Berlin Wall," Econometrica, Econometric Society, vol. 83, pages 2127-2189, November.

    More about this item

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ijethy:v:6:y:2010:i:1:p:137-148. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1742-7355 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.