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 in order to determine—amongst other things—the quantity and quality of the effort that a worker might exert in performing his or her duties. This generates a hierarchy of workers. Lay-offs then become a more efficient tool than across-the-board wage cuts for riding a slump, since the adverse morale and productivity effects of laying off of a minority of lower status workers are less severe than the alternative.