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Famous Like Me > Actor > S > Michael Spence

Profile of Michael Spence on Famous Like Me

Name: Michael Spence  
Also Know As:
Date of Birth: 19th September 1983
Place of Birth: Konstanz, Germany
Profession: Actor
From Wikipedia, the free Encyclopedia

Michael Spence (born November 7, 1943) is an American economist and recipient of Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, along with George A. Akerlof and Joseph E. Stiglitz, for their work on the dynamics of information flows and market development. 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.


Spence, A.M.: "Job Market Signaling", Quarterly Journal of Economics 83 (1973), pp. 355-377.

This content from Wikipedia is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article Michael Spence