On Oct. 27, NYU Shanghai had the honor to welcome Michael Spence, the world-renowned economist and a faculty member of NYU Stern School of Business. For those outside of the Economics fan base - Professor Spence is considered one of the superstars in the field. He has been awarded some some of the most prestigious recognitions in Economics, such as the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal from the American Economics Association in 1981. His most significant contribution is Job Market Signaling model. As complicated as this might sound, it is actually quite straightforward. To put it simply, the model shows how employers, regardless of employees’ knowledge and skill sets, are willing to pay higher wages to applicants who show better education credentials. Indeed, through the acquisition of those degrees, the job applicant is able to send signals about his/her potential skills and knowledge. Basically, he gave an answer to the question every one of us has wondered at 3 AM writing an essay for some daunting and pointless core requirement.Michael Spence attended the lunchtime talk with his wife and two beautiful children who were bursting with pride of their dad giving a lecture about the Chinese economy. The Nobel Laureate shared valuable insights about how quickly China’s economy has been developing. He carefully evaluated the size of the nation and compared it to countries and regions such as Korea, Singapore and Taiwan. Indeed, China has been able to sustain a very impressive growth rate even though it is a home to over a billion people. Professor Spence especially noted that China understood the power of its middle class in making such quick economic growth a reality.Finally, he took the time to answer questions from the audience. The crowd was mostly composed of students majoring in Economics or Business and Finance and faculty members.The inevitable question concerned the Chinese stock market. For those who are not familiar with the topic - the Chinese stock market has been noticeably fluctuating for the past couple of months, trillions of pounds have been lost in the global equities and China has injected billions of pounds to stop the crash and limit the damages. Professor Spencer shared insights the matter and criticized some of the ways China is trying to recover from that crash. Another question related to the current tools used to measure the world’s economies (GDP) and their effectiveness in the matter of growing debt and depreciating physical capital. Professor Spencer pointed out that even though these measurements are definitely not perfect, it is going to be very difficult to come up with new ones and we need to acknowledge the fact that it is going to be a long process to get the right measurement. This article was written by Nady Thiam. Send an email to [email protected] to get in touch. Photo Credit: Dylan Crow