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...

Social scientists often emphasize how ‘culture’ and ‘social norms’ can be important determinants of economic behavior and development. This raises questions of the relative importance of economic incentives and these other more social variables, like culture, and of how...