Researchers from the University of Tel Aviv have found the following:
An analysis of handwriting on ancient pottery suggests that literacy may have been more widespread than previously known in the Holy Land around 600 B.C.
Source: New Evidence on When Bible Was Written: Ancient Shopping Lists – The New York Times
Analysis of writing on pottery shards at the site of a small fort (at at the time remote) showed at least six different hands in the lettering.
The does appear to show that a basic level of literacy was available in the culture to support the composition of Biblical texts before the deportation to Babylon.
Sat Sapienti 