Beyond Unemployment: Measuring Graduate Labour Underutilization in Nigeria  <div> Informality and Occupational Mismatch Among Nigeria's Tertiary-Educated Workforce </div>

Across much of the developing world, headline unemployment is a poor measure of how well the labour market serves its most educated workers. Nigeria illustrates the problem starkly. Official statistics report modest unemployment among the tertiary-educated: 9.0 percent for postsecondary and 2.0 percent for postgraduate holders in the first quarter of 2024. Two decades of Nigerian scholarship have nonetheless described graduate unemployment and underemployment as a national crisis. This paper argues that the two accounts are not in conflict once graduate labour underutilization, defined jointly through informality, occupational skill mismatch, and time-related underemployment, is measured directly rather than inferred from the unemployment rate. Using individual-level microdata from all six quarters of the Nigeria Labour Force Survey currently available, the first quarter of 2024 through the second quarter of 2025, we construct and validate these three indicators against official benchmarks, estimate their association with education tier net of demographic and geographic composition, and decompose overall underutilization into the share attributable to each condition. Composite informality and occupational mismatch both decline sharply and significantly with education tier, a relationship that survives controls for age, sex, urban or rural residence, state, and quarter. Time-related underemployment shows no significant tier gradient once the same controls are applied, indicating that its raw association with education level in the descriptive data reflects demographic and geographic composition rather than a genuine effect of credential level. A Shapley decomposition shows that informality accounts for roughly half of overall graduate underutilization at every education tier, with occupational mismatch accounting for most of the remainder and time-related underemployment a consistently minor contributor. Even among postgraduate degree holders, more than a quarter remain informally employed and roughly a quarter remain occupationally mismatched, at a point in the education distribution where headline unemployment is close to zero. This paper is the first in a planned sequence: it establishes the measurement and documents the pattern; a second paper will examine how employment quality mediates the wage returns to tertiary education, and a third will test competing theoretical accounts of why mismatch and informality persist using richer, cohortaware modelling.