Economics seminar: Skill formation, temporary disadvantage and elite education

Pehr-Johan Norbäck, IFN, will present the paper "Skill formation, temporary disadvantage and elite education", jointly written with Per Hjertstrand and Lars Persson, both at IFN. The paper argues that small disadvantages, such as being born later in the year, can lead to a more succesful career.

Elite skills have become crucial in today's superstar economy. We develop a model where we show that individuals with temporary disadvantages must exert greater effort to gain access to elite education. This îunderdog-incentive effect implies that educated underdogs obtain superior adult skills. We find support for this mechanism in soccer data: players born early in the year dominate youth soccer, but players born late (but not too late) in the year become the superstars. We also show that if young students discount the
future too much, high requirements to elite education can increase expected life-time welfare for disadvantaged students.