In order to establish the reasons for the relationship between bachelor’s degree and unemployment/underemployment among young graduates, the study will be based on the following hypotheses.
Null hypothesis: Wage inequality is not responsible for graduates’ roles incompatibility with the requirements of the labour market.
Alternative hypothesis: Wage inequality is responsible for graduates’ roles incompatibility with the demands of the labour markets.
Applicable social concepts
Social theories and terminology
Wage inequality is the imbalance between the skills possessed by an individual and the pay for a particular labour service. Several factors are associated with the issue of wage inequalities, such as an open economy, competition, unemployment, and imbalance in demand-supply of labour results in wage inequality. Therefore, rigidities and inefficiencies that typify the job market are applied to the legal minimal wage to reduce formal employment’s attractiveness, especially for graduates who end up in low paying jobs that meet the minimum wage as part of the education work mismatch challenge (Calderon & Sorenson, 2014). The implication of wage inequality and work mismatch is responsible for the high graduate unemployment/underemployment rates. Although bachelor’s degree graduates are trained to work in the primary labour market, they, in most cases, end up working in the secondary job market. In the primary job market, jobs are well paid, work environment conditions are excellent, there is job security, and stability of employment is certain. In addition, research shows that the primary job market has formal and equitable work processes that are guaranteed. Additionally, particular advancement structures exist (Jacoby & Goldsmith, 1998). On the other hand, the secondary labour market is characterised by jobs that attract low wages and dismal working conditions. It has an employment structure that is variable, and it possesses fewer opportunities for advancement (Rose, 2013).
Value of the social research
The findings of the social research will be significant in establishing the possible causes of underemployment of bachelor’s degree graduates in the labour market. The relevant authorities may use the findings of the research to introduce a job role-pay policy to correct the current imbalance.
Practical implications of the inquiry
The study will not be a magic bullet in understanding the relationship between wage inequality and level of education among young bachelor’s degree graduates. It will only provide structures that must be combined with specific goals to address the wage inequality and underemployment concerns. For example, if it would be demonstrated that many graduates are underpaid, then the relevant bodies would be requested to design and implement uniform structures that would go a long way to increasing wages of workers with a first degree. In addition, workers would be advised to visit the relevant online sites and bodies to compare their salaries with what they should be earning.
According to Al-Harthi (2011), the private sector faces several challenges in implementing the balance between the level of education and the wages to be paid. To begin with, labour costs increase when more funds are paid to graduate employees as opposed to unskilled workers. This is due to the fact that graduates have to be paid higher salaries and social security benefits than unskilled workers. Therefore, the main formula for the wage distribution in the private labour market depends on the roles assigned to personnel (Al-Harthi, 2011). Al-Thobyany and Murshed (2007) compared the job market with higher education and determined the level of compatibility. The authors established that the greatest challenge of incorporating higher education qualifications into wage earnings is to spot the opposite wage-role structure that can be applied to justify the constraints in the labour market (Al-Thobyany & Murshed, 2007). The two pieces of evidence support the alternative hypothesis since it is clear that wage inequality is responsible for graduate role incompatibility regarding the requirements of the labour market (Al-Harthi, 2011; Al-Thobyany & Murshed, 2007).
Possible biases and alternative interpretation
Concerning the first evidence, the study was related to the Egypt and Oman labour markets. The dynamics of the markets are not universal. The findings could also be interpreted to mean that the results of the role-wage imbalance are not present in the global labour markets. In the second evidence, the constraints in the job market are not related to the specific group of study, which is the bachelor’s degree graduates. Besides, the findings could be misinterpreted to mean that there are no other factors that are responsible for the issue of wage inequality across the world.
The study findings presented in this study provide implications for many players in the job market. The information provided confirms the alternative research hypothesis that wage inequality is responsible for graduates’ roles incompatibility with the requirements of the labour markets. The information can be applied to draw conclusions based on the hypothesis. It is evident that many business establishments offer different wages for workers, who have first degrees. As a result, instead of a significant number of the group of personnel opting for the primary job market, it is forced to work in the secondary job market, where many workers are paid relatively low wages. Due to dissatisfaction with job terms and conditions in the secondary labour market, many first-degree holders leave their companies for greener pastures, leading to high rates of turnover that negatively impact firms in the long-term. However, if teaching institutions and players in the labour market liaise in the process of developing curricula, then there would be fewer cases of education work mismatches.
Al-Harthi, K. (2011). University student perceptions of the relationship between university education and the labour market in Egypt and Oman. Prospects, 3(41), 535–551.
Al-Thobyany, T., & Murshed, H. (2007). The university and the labour market in Saudi Arabia: an exploration of structural mismatches in Jeddah city. London, UK: University of Essex.
Calderon, V. J., & Sorenson, S. (2014). Americans Say College Degree Leads to a Better Life. Gallup Poll Briefing, 3(2), 33-41.
Jacoby, S., & Goldsmith, P. (1998). Education, Skill, and Wage Inequality. Challenge (05775132), 41(6), 88-120.
Rose, S. (2013). The Value of a College Degree. Change: The Magazine of Higher Learning, 45(6), 24-32.