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Literacy Traps: Society-wide Education and Individual Skill Premia

  • Atal, Vidya

    ()

    (Cornell University)

  • Basu, Kaushik

    ()

    (World Bank)

  • Gray, John

    ()

    (Cornell University)

  • Lee, Travis

    ()

    (Cornell University)

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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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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