Professor Michael Spence

Recent Speaker

Nobel Laureate Economist

August 17, 2011

11.30am - 1.30pm

"The next convergence: the future of economic growth in a multispeed world"

The Next Convergence: the Future of Economic Growth in a Multispeed World (July) by Nobel Laureate Michael Spence. Spence won the Nobel Prize with Joseph Stiglitz in 2001 and has chaired the independent Commission on Growth and Development in the US. This is his most accessible book to date: a challenge from his publisher to avoid the jargon of economics.


With the British Industrial Revolution, part of the world’s population started to experience extraordinary economic growth—leading to enormous gaps in wealth and living standards between the industrialised West and the rest of the world. This pattern of divergence reversed after World War II, and now we are midway through a century of high and accelerating growth in the developing world and a new convergence with the advanced countries — a trend that is set to reshape the world. Michael Spence explains what happened to cause this dramatic shift in the prospects of the five billion people who live in developing countries. He clearly and boldly describes what’s at stake for all of us as he looks ahead to how the global economy will develop over the next fifty years.

Andrew Michael Spence (born November 7, 1943) is an American economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences, 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 Harvard 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 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 former Dean of the Stanford Graduate School of Business and is presently the Chairman of the Commission on Growth and Development.
Spence joined the faculty of New York University Stern School of Business on September 1, 2010. (wikipedia)