Education as a social agreement

► A low-skill trap can be observed even after having removed the main causes of equilibrium multiplicity identified by the traditional economic literature. ► The primary source of under-education is the lack of information among heterogeneous agents. ► A fundamental step in the process of economic development is the creation of some coordinating institutions. ► During the process of economic development, the effects of an increase in the workers' bargaining power can turn from negative to positive.