Generalized Structural Equation Modeling of Education Job Mismatch and Labor Market Outcomes

Abstract

This study examines the relationship between educational mismatch and income satisfaction, job satisfaction, and job search intention among Egyptian public university graduates. It uses data from 1,374 graduates who participated in the 2021 Employment of Tertiary Education Graduate Survey. Generalized Structural Equation Modeling (GSEM) was used to estimate both direct and indirect effects. Educational mismatch was treated as a multidimensional construct that includes vertical mismatch, horizontal mismatch, and skills mismatch. The results show that 85.2% of graduates experience at least one type of educational mismatch. Skills mismatch is the most common type, affecting 79.3% of graduates, followed by vertical mismatch (34.1%) and horizontal mismatch (24.5%). The results indicate that educational mismatch is negatively associated with income satisfaction (β = −0.5576, p = 0.001) and job satisfaction (β = −0.2947, p = 0.037), while it is positively associated with job search intention (β = 0.9313, p < 0.001). In terms of magnitude, these coefficients correspond to (proportional) odds ratios of 0.57, 0.74, and 2.54, respectively – that is, mismatched graduates have roughly 43% lower odds of being satisfied with their income and more than double the odds of intending to search for another job, relativeto matched graduates. The findings also reveal significant indirect effects, suggesting that educational mismatch helps explain the relationships between graduates’ demographic, educational, and employment characteristics and their income satisfaction, job satisfaction, and job search intention. These findings highlight the importance of improving the alignment between higher education outcomes and labor market needs.