Skill Formation, Temporary Disadvantage and Elite Education

69 Pages Posted: 19 Oct 2020

See all articles by Per Hjertstrand

Per Hjertstrand

Research Institute of Industrial Economics (IFN)

Pehr-Johan Norbäck

affiliation not provided to SSRN

Lars Persson

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Date Written: 2020

Abstract

Elite skills have become crucial in today’s superstar economy. We develop a multi-period skillformation model where we show that individuals with temporary disadvantages must exert greater effort to gain access to elite education. This “underdog-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.

Keywords: skill formation, temporary disadvantage, elite education, soccer, underdog

JEL Classification: I200, J240, D900

Suggested Citation

Hjertstrand, Per and Norbäck, Pehr-Johan and Persson, Lars, Skill Formation, Temporary Disadvantage and Elite Education (2020). CESifo Working Paper No. 8612, Available at SSRN: https://ssrn.com/abstract=3711888

Per Hjertstrand (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Pehr-Johan Norbäck

affiliation not provided to SSRN

No Address Available

Lars Persson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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