Michael Spence
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 Stanford University homepage photo |
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| Born | November 7, 1943 Montclair, New Jersey |
|---|---|
| Residence |  USA |
| Nationality | US |
| Field | Economics |
| Institution | Stanford University |
| Alma Mater | Harvard University (Ph.D.) University of Oxford (B.A.) Princeton University (B.A.) |
| Academic Advisor | Kenneth Arrow Thomas Schelling Richard Zeckhauser |
| Known for | Signaling theory |
| Notable Prizes | John Bates Clark Medal (1981) Nobel Prize in Economics (2001) |
Michael Spence (born November 7, 1943) is an American-born, Canadian-raised economist and recipient of the 2001 Nobel Memorial Prize in Economics, along with George A. Akerlof and Joseph E. Stiglitz, for their work on the dynamics of information flows and market development. He conducted this research while at Stanford University. In the current technological environment - with ever more abundant information flows about market development, prices, profit margins, investment instruments and rates of return - their work is more relevant than ever.
Michael Spence is probably most famous for his job-market signaling model, which essentially triggered the enormous 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.
In 1966, Spence was awarded the Rhodes Scholarship upon graduation from Princeton University with a degree in Mathematics.
[edit] Literature
Spence, A.M.: "Job Market Signaling", Quarterly Journal of Economics Vol. 87, No. 3 (1973), pp. 355-374.
[edit] See also
- List of economists
- List of economics consultancies and think tanks
- Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel
- Rhodes Scholarship
