The Diploma Paradox: Highly Educated,Wrongly Employed — The Reality of Womenin Azerbaijan

Abstract

Azerbaijan presents a macroeconomic puzzle that this paper terms the diploma paradox: between 2006 and 2024, female gross tertiary enrolment more than doubled — from 20.2% to 46.9% — overtaking male enrolment by roughly ten percentage points, yet female labor force participation stagnated near 61%, the gender gap in wage employment persisted at roughly nine percentage points, and nearly 39% of employed women remained concentrated in agriculture, the economy's lowest-productivity, lowest-skill sector. Drawing on World Bank, ILO, and national statistical data for 2000–2025, the study applies descriptive decomposition, a synthetic education–employment mismatch index, and an extended Mincerian interpretive framework to quantify the divergence between women's educational attainment and their labor market absorption. The results indicate that the private returns to female education in Azerbaijan are systematically discounted through three channels: horizontal and vertical overeducation, sectoral segregation into low-wage care and agrarian employment, and a wage penalty of approximately 35–46% documented by national and World Bank estimates. The paper contributes a country-level operationalization of the diploma paradox concept and derives policy implications for skills signaling, childcare infrastructure, and the reform of occupational licensing. Limitations include the absence of micro-level panel data on individual mismatch; future research directions are proposed.