Efficiency wage models explain unemployment as a manifestation of the unavoidable incompleteness of the employment contract. In hiring workers, firms use education as a screen to determine the quantity and quality of the effort that a worker might exert in performing his or her duties. This generates a hierarchy of workers. (KDP)

Provides a "deliberately provocative bird's-eye view" of new directions in thinking among economists concerned with education. Looks at the socialization function of schooling, the use of educational attainment as a hiring criterion, the importance of the "incomplete" employment contract, and labor market segmentation theory. Considers…