Authors:
Atal, Vidya
Basu, Kaushik
Gray, John
Lee, Travis
Publisher:
Cornell University, Center for Analytical Economics (CAE), Ithaca, NY
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.