Literacy is one of the most important attributes of POPs, and is highly important for the research system.
Higher literacy will increase research points gained and consciousness gain. Every POP in the game has a literacy rate, but for some purposes like generating research points, the literacy rate is averaged for a country as a whole. 
Clergy POPs will slowly increase the literacy of the POPs in a province. The increase depends on the percentage of clergy in the province, 4% being ideal, the country's education funding, and the country's education efficiency. The higher the funding and the larger the Clergy POP, the faster literacy will increase in the province. As literacy has a low decay rate it will go down in provinces with a clergy population below 0.5%.
Impact of Literacy
Literacy has the following effects:
- Increases POP promotion for certain professions
- Increases Consciousness
- Provides research points
Mechanics
Literacy Factors
Literacy change is calculated for each province individually based on:
- % Clergy in province (not state)1
- Education Efficiency
- Education Spending (slider %)2
- BASE_CLERGY_FOR_LITERACY (defines.lua) (base 0.005 (0.5%))
- MAX_CLERGY_FOR_LITERACY (defines.lua) (base 0.04 (4%))
- LITERACY_CHANGE_SPEED (defines.lua) (base 0.1 (10%))
Monthly change base value (Base Change) = ([% Clergy in province] - [BASE_CLERGY_FOR_LITERACY]) * [LITERACY_CHANGE_SPEED] / ([MAX_CLERGY_FOR_LITERACY] - [BASE_CLERGY_FOR_LITERACY])
Change per month = 0.01 * [Education Spending] * (1 + [Education Efficiency]) * [Base Change]
1: % Clergy in province is capped at MAX_CLERGY_FOR_LITERACY + BASE_CLERGY_FOR_LITERACY, so 4.5% for maximum increase in vanilla.
2: For unknown reasons, there is a percentage displayed in the UI, the percentage = 100 * [Base Change] * (1 + [Education Efficiency]) [Education Spending]*([Education Spending] - 1 ).
This percentage plays no role in the actual calculations and may only confuse you.
Example:
- % Clergy in province = 1.09%
- Education Efficiency = 20%
- Education Spending = 50%
- BASE_CLERGY_FOR_LITERACY = 0.5%
- MAX_CLERGY_FOR_LITERACY = 4%
- LITERACY_CHANGE_SPEED = 10%
Change per month = 50% * (100% + 20%) * (1.09% - 0.5%) * 10% / (4% - 0.5%) = +0.0101142857% This is capped off at display to 0.0101% .