Overeducation and the returns to enterprise-related schooling

This paper examines the relation between overeducation and enterprise-related schooling. If overeducation and enterprise-related schooling are substitutes the social costs of Overeducation are less. We find that correctly allocated workers have the highest probability of participation in enterprise-related schooling, while undereducated workers have the lowest probability of participation. There is no evidence of overeducation and enterprise-related schooling being either substitutes or complements. If we do not correct for self-selection, the average return on a year of education for correctly allocated workers is higher than the average rate of return to education for under- and overeducated workers. If we correct for self-selection in the participation in enterprise-related schooling the rate of return to education increases. The rates of return to under- and overeducation increase as well. If we correct for self-selection the rate of return to a year of undereducation becomes higher than the rate of return to a year of actual education. For undereducated workers the wage gain of participation in enterprise-related schooling is higher than for a correctly allocated worker. A year of Overeducation decreases the wage gain of participation in enterprise-related schooling for participants. © 1993