Michael Spence

Andrew Michael Spence (born November 7, 1943, Montclair, New Jersey) is a Canadian 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. He obtained a PhD in Economics from Harvard. 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.

Spence joined the faculty of New York University's Stern School of Business on September 1, 2010. He joined the faculty of SDA Bocconi School of Management in Italy in July 2011.

He is a senior fellow at Stanford University's Hoover Institution and the Philip H. Knight Professor Emeritus of Management in the Graduate School of Business. Spence is also a Commissioner for the Global Commission on Internet Governance. Additionally, Spence is also a member of the Berggruen Institute's 21st Century Council.

He is the author of three books and 50 articles, and has also been a consistent contributor to Project Syndicate, an international newspaper syndicate, since 2008. Among his beliefs are that high-frequency trading should be banned.

Spence had both Bill Gates and Steve Ballmer in a graduate-level economics class at Harvard. In a 1999 Fortune interview, however, Gates and Ballmer admitted not attending class and passing only after cramming for four days before the final.

Spence is an Honorary Fellow of Magdalen College, Oxford, where he studied as a Rhodes Scholar. He was the recipient of the Nobel Memorial Prize in Economic Sciences in 2001, as well as the John Bates Clark Medal from the American Economics Association in 1981.

• Spence, Michael (1973). "Job Market Signaling". Quarterly Journal of Economics. 87 (3): 355–374. doi:10.2307/1882010. JSTOR 1882010.
• Market Signaling: Informational Transfer in Hiring and Related Screening Processes. Cambridge, MA: Harvard University Press. 1974. ISBN 978-0674549906.
• The Next Convergence: The Future of Economic Growth in a Multispeed World. New York: Farrar, Straus and Giroux. May 2011. ISBN 9781429968713.

Spence currently lives in Milan, Italy with his wife and children.