Michael Spence
| Michael Spence | |
|---|---|
 |
|
| Born |
November 7, 1943 Montclair, New Jersey, USA |
| Nationality | United States |
| Institution |
Harvard University Stanford University SDA Bocconi School of Management New York University |
| Field | Microeconomics, labor economics |
| Alma mater |
Harvard University, (Ph.D.) University of Oxford, (B.A.) Princeton University, (B.A.) |
| Doctoral advisor |
Kenneth Arrow Thomas Schelling |
| Influences | Richard Zeckhauser |
| Contributions | Signaling theory |
| Awards |
John Bates Clark Medal (1981) Nobel Memorial Prize in Economics (2001) |
| Information at IDEAS / RePEc | |
Andrew Michael Spence (born November 7, 1943, Montclair, New Jersey) is an American economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences, along with George Akerlof and Joseph E. Stiglitz, for their work on the dynamics of information flows and market development.
Spence is probably most famous for his job-market signaling model, which essentially triggered the enormous volume of literature in this branch of contract theory. In this model, employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them. Employers will pay higher wages to more educated employees, because they know that the proportion of employees with high abilities is higher among the educated ones, as it is less costly for them to acquire education than it is for employees with low abilities. For the model to work, it is not even necessary for education to have any intrinsic value if it can convey information about the sender (employee) to the recipient (employer) and if the signal is costly.
Spence did his middle and high school education at the University of Toronto Schools of the University of Toronto. In 1966, he was awarded a Rhodes Scholarship at Oxford University upon graduation from Princeton University with a degree in philosophy. He studied mathematics at Oxford. Spence is a Philip H. Knight Professor Emeritus and former Dean of the Stanford Graduate School of Business; he is the Chairman of the Commission on Growth and Development.
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