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1、IZADPNo.4047LiteracyTraps:Society-wideEducationandIndividualSkillPremiaVidyaAtalKaushikBasuJohnGrayTravisLeeDISCUSSIONPAPERSERIESFebruary2009ForschungsinstitutzurZukunftderArbeitInstitutefortheStudyofLaborLiteracyTraps:Society-wideEducationandIndividualSkillPremiaVidyaAtalCo
2、rnellUniversityKaushikBasuCornellUniversityandIZAJohnGrayCornellUniversityTravisLeeCornellUniversityDiscussionPaperNo.4047February2009IZAP.O.Box724053072BonnGermanyPhone:+49-228-3894-0Fax:+49-228-3894-180E-mail:iza@iza.orgAnyopinionsexpressedherearethoseoftheauthor(s)andnott
3、hoseofIZA.Researchpublishedinthisseriesmayincludeviewsonpolicy,buttheinstituteitselftakesnoinstitutionalpolicypositions.TheInstitutefortheStudyofLabor(IZA)inBonnisalocalandvirtualinternationalresearchcenterandaplaceofcommunicationbetweenscience,politicsandbusiness.IZAisanind
4、ependentnonprofitorganizationsupportedbyDeutschePostFoundation.ThecenterisassociatedwiththeUniversityofBonnandoffersastimulatingresearchenvironmentthroughitsinternationalnetwork,workshopsandconferences,dataservice,projectsupport,researchvisitsanddoctoralprogram.IZAengagesin(
5、i)originalandinternationallycompetitiveresearchinallfieldsoflaboreconomics,(ii)developmentofpolicyconcepts,and(iii)disseminationofresearchresultsandconceptstotheinterestedpublic.IZADiscussionPapersoftenrepresentpreliminaryworkandarecirculatedtoencouragediscussion.Citationofs
6、uchapapershouldaccountforitsprovisionalcharacter.Arevisedversionmaybeavailabledirectlyfromtheauthor.IZADiscussionPaperNo.4047February2009ABSTRACTLiteracyTraps:Society-wideEducationandIndividualSkillPremiaUsingamodelofO-ringproductionfunction,thepaperdemonstrateshowcertaincom
7、munitiescangetcaughtinalow-literacytrapinwhicheachindividualfindsitnotworthwhileinvestinginhigherskillsbecauseothersarenothigh-skilled.Themodelshedslightoneducationalpolicy.Itisshownthatpolicyforpromotinghumancapitalhastotaketheformofamechanismforsolvingthecoordinationfailur
8、einpeople’schoiceofeducationalstrategy.JELClassification:D20,I28,J31Keyword
