We propose a search equilibrium model in which the length of schooling defines the number of occupations a worker can apply for. Returns to education are twofold: there are status-mobility returns, since education raises a person's chance of leaving unemployment; but there are also wage-mobility returns, as education raises the speed at which one climbs in the wage ladder. Uunemployment incidence and duration as well as wage dispersion provide incentives to schooling; in turn, labour demand and wage dispersion respond to education investments. Unlike status-mobility returns, wage-mobility returns to schooling are not matched by a social gain, and workers over-educate. A combination of minimum wage and schooling fee can restore social efficiency.