This study attempts to fill a void in the literature by examining education-occupation
mismatches in Egypt. Using the Egypt Labor Market Panel Survey (ELMPS) 2006 and Egypt
Labor Market Survey (ELMS) 1998, this paper investigates whether the empirical evidences
of studies on over-education and under-education carry over to the private sector of the
Egyptian labor market; evaluates the incidence and magnitude of the education-occupation
mismatch by gender and by occupational categories; and determines whether the incidence of
educational mismatches has increased over time. The main findings are as follows: there is
evidence of an education-occupation mismatch in the Egyptian private sector. The incidence
has declined from 51% to 42% during the eight year period, and males are more likely to be
mismatched than females. The Egyptian labor market has witnessed a drop in the percentage
of overeducated workers at the expense of an expansion in the share of under-educated
workers. Empirical findings do not support the main stream literature. Returns to overeducation
for white collar and blue collar males are higher than those of adequately educated
males and are greater in 2006 than in 1998. Females in white collar jobs, both over and
undereducated, received higher returns than adequately educated females in 1998, but returns
to over-education were higher and returns to under-education were lower than adequate
education in 2006. Females in blue collar jobs are being penalized if they are inadequately
matched, especially in 2006, and are rewarded less than males. These findings support the job
competition model in a labor market with an imperfect information system whereby
employers use education as an indicator of the cost of investing in job training. Workers, on
the other hand, may accept these jobs while competing for a job.