Literacy traps: Society-wide education and individual skill premia

Vidya Atal, Kaushik Basu, John Gray, Travis Lee

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


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.

Original languageEnglish
Pages (from-to)137-148
Number of pages12
JournalInternational Journal of Economic Theory
Issue number1
StatePublished - 2010


  • Education
  • Literacy
  • O-ring
  • Skill formation
  • Traps


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