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Literacy Traps: Society-wide Education and Individual Skill Premia

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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.

Suggested Citation

  • Vidya Atal, 2009. "Literacy Traps: Society-wide Education and Individual Skill Premia," Working Papers id:2324, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:2324
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    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.

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    More about this item

    Keywords

    education; people; O-ring; skill formation; economy; human capital; production function; communities; literacy trap; skills; educational policy; strategy; Literacy; Society;
    All these keywords.

    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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