This paper is inspired by the understanding that “life is more than a set of commercial relations” (Nussbaum & Sen 1993: 9) and that treating tertiary graduates as a homogenous group on the labour market is not appropriate in expanded and diversified education systems (Kogan et al., 2011).

Data for 2018 show that in the European Union (EU) 28, the unemployment rate of persons aged 25–39 with higher education was 4.8%, whereas that of persons with lower secondary education or less was more than three times higher – 16.1%. However, in recent years, there has been a widespread, often overlooked, tendency for graduates to be employed in jobs not requiring a university diploma. For example, according to data from CEDEFOP, over-qualification rate (among tertiary graduates for age group 25-34) in the EU for 2018 is 25.1%. This rate ranges from 10% in Luxembourg to  47.8% for Greece. Analyses also show that the degree of education-job mismatch depends on diverse social factors, with differing values for graduates of individual higher education institutions (Ilieva-Trichkova & Boyadjieva, 2016). Mismatches at the graduate level can manifest as over-education or mismatched skills. Although the two may overlap, ‘educational mismatches by no means imply mismatches between available and required knowledge and skills’ (Allen & de Weert 2007: 72).

In this context, the question of the well-being of higher education graduates comes to the fore. Previous research shows that besides the benefits of education in terms of jobs and earnings, people with a higher level of education also enjoy better health and health behaviour (e.g. Brännlund, Hammarström & Strandh 2013; OECD 2015), have better capabilities of voice and agency (Brännlund, Hammarström & Strandh 2012), have higher levels of interpersonal trust and tolerance (e.g. Borgonovi 2012; Boyadjieva & Ilieva-Trichkova 2015), are more likely to be civically engaged, they report higher levels of social support from friends and relatives, they are more likely to be satisfied with their lives overall (OECD 2015). However, it is not clear if there are some differences in this regard when graduates are employed below their level of education.

Against this background, this paper’s aim is twofold: 1) to explore how the subjective individual and societal well-being differ among higher education graduates and especially to what extent it is associated with graduate vertical education-job mismatch; and 2) to outline some policy implications which take into account the role of higher education for the improving the quality of individual and societal life beyond their economic and instrumental dimensions and the importance for well-being of both well-being achievements and well-being freedom (Sen 1993).

In order to achieve these aims the paper applies the capability approach as a theoretical framework. The capability approach is associated mainly with the work of the Nobel Prize-winning economist Amartya Sen and the political philosopher Martha Nussbaum. It is a social justice normative theoretical framework for conceptualizing and evaluating phenomena such as inequalities, poverty and well-being. According to the capability approach, it is not so much the achieved outcomes (functionings) that matter, but the real opportunities (capabilities) that one has for achieving those outcomes.

The notion of capability implies a larger scope of benefits from education than improving economic production and includes influencing social change and enhancing the well-being and freedom of individuals and peoples. The human capability perspective focuses on the impact that education may have on expanding human ability to lead a valuable life and to make substantive choices (see Sen 1999: 292–297).

The paper applies secondary data analysis of the ninth wave of the European Social Survey (2018) for 25 European countries. The data will be analysed via descriptive statistics, correlation analysis and multilevel regression modeling. The multilevel regression technique is preferred because separating the variation between the individual and macro levels and allowing the constant terms to vary between countries allows the technique to take into account the nested structure of the data (Rabe-Hesketh & Skrondal 2012). More specifically, we will use information on both the individual level (level 1) and the country level (level 2). The country where people were interviewed will serve as the clustering variable. Given that our dependent variables are binary, we will use random effects logit models. The models are estimated with the xtlogit command in Stata 14. For measuring subjective societal well-being we use two indicators: the means of the graduates’ answers to questions about their trust in other people and their opinion on whether they would have a fair chance of getting the job they were seeking. For measuring the subjective individual well-being we use two dummy variables as dependent variables in the regression analyses: whether they are happy or not and whether they are satisfied by their life as a whole or not. As independent variables, we include both individual- and country-level characteristics. The main independent variable at individual level is education-job mismatch. Indeed, there is no uniform and undisputable typology or measurement framework of education-job mismatch (see ILO 2014; Quintini 2011). Each measure has its own pros and cons (Støren & Arnesen 2011). In this paper, we apply a normative approach to its assessment. Such an approach allows us to use an objective measure for the education-job mismatch. In order to assess the level of vertical education-job mismatch, we will follow the International Standard Classification of Occupations (ISCO-08) at 4-digit levels. More specifically, ISCO 1, 2 and 3 are categories of occupations usually requiring tertiary qualifications. ISCO 1 refers to Managers, ISCO 2 to Professionals, whereas ISCO 3 refers to Technicians and associate professionals. Therefore, higher education graduates who are employed in some of the other categories, ISCO 4–9, are classified as vertically mismatched. In addition, we use a set of control dummy variables: gender (Female= 1), social background (High= 1), minority background (Yes= 1); and age (continuous variable). At the country level, we distinguish between the country’s welfare regimes.

The paper offers a critical, theoretically inspired and empirically underpinned comparative analysis and argues that participation in higher education has wider benefits than the economic ones and that the incidence of graduates’ vertical education-job mismatch has an important influence on the experience of the benefits from higher education. The acceptance of jobs that are below one’s level of education can be perceived as a way to overcome unemployment. However, this strategy has its ‘price’. Studies (e.g. Allen & van der Vedlen 2001; Chevalier & Lindley 2009) have revealed the economic side of this ‘price’ – lower income and partial loss of human capital. This paper demonstrates that the non-economic aspects of graduates’ vertical education-job mismatch are no less important as they are linked to graduates’ subjective well-being. Vertical mismatch is associated with lower levels of trust, happiness and life satisfaction. However, it should be emphasised that the influence of graduates’ mismatch on their subjective well-being is embedded in different social contexts and differs between countries with different welfare regimes. The study of non-economic aspects of graduates’ mismatch has at least two policy implications. First, it shows that policies on higher education should always take into account the diversity of higher education roles and their influences on individual and societal life beyond economic returns. Second, it demonstrates the crucial importance of the qualitative aspects of employability, i.e. that employability refers not to ability to find any jobs, but to capacity to be employed in jobs with specific quality in terms of qualification, career perspectives, etc. That is why policies for expansion of higher education need to be supported by increasing of its quality and fostering the capacity of the economies to create graduate jobs of good quality. Otherwise, it may lead to broken promises from education and growing frustration among graduates.

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