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Education–Job Match, Salary,and Job Satisfaction across thePublic, Non-Profit, and For-Profit Sectors: Survey of recentcollege graduatesYoung-joo Leea & Meghna Sabharwalaa School of Economic, Political and Policy Sciences,University of Texas at Dallas, Richardson TX, USAPublished online: 16 Sep 2014.

To cite this article: Young-joo Lee & Meghna Sabharwal (2014): Education–JobMatch, Salary, and Job Satisfaction across the Public, Non-Profit, and For-ProfitSectors: Survey of recent college graduates, Public Management Review, DOI:10.1080/14719037.2014.957342

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EDUCATION–JOBMATCH, SALARY,AND JOBSATISFACTIONACROSS THE PUBLIC,NON-PROFIT, ANDFOR-PROFITSECTORSSurvey of recent collegegraduates

Young-joo Leeand Meghna Sabharwal

Young-joo LeeSchool of Economic, Political and Policy SciencesUniversity of Texas at DallasRichardson TXUSAE-mail: ylee@utdallas.edu

Meghna SabharwalSchool of Economic, Political and Policy SciencesUniversity of Texas at DallasRichardson TXUSAE-mail: mxs095000@utdallas.edu

Abstract

Using data from the 2006 Survey of RecentCollege Graduates, this study examines howeducation–job match and salary may explainrecent college graduates’ job satisfaction inthe public, non-profit, and for-profit sectors.The results imply that while education–jobmatch increases job satisfaction in all threesectors, for-profit workers may compensatethe loss in job satisfaction due to poor matchwith increased satisfaction from higher sal-ary. The findings suggest that, in the publicand non-profit sectors, increased salary can-not make up the loss in job satisfaction frompoor education–job match as much as itdoes in the for-profit sector.

Key wordsEducation–job match, job satisfaction, sec-toral differences

Public Management Review, 2014

http://dx.doi.org/10.1080/14719037.2014.957342

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Job satisfaction has an important impact on employee turnover, and understanding theattributes of job satisfaction in different sectors is a timely research topic, especiallygiven the warnings by many scholars about increasing turnover in government and thenon-profit sector (Lewis and Cho 2011). Various attributes affect a person’s jobsatisfaction, including job characteristics, work context, rewards, and others(Kalleberg 1977). Among others, literature suggests that the close match betweenone’s job and education is the key determinant of job satisfaction (Allen and Van DerVelden 2001; Rodriguez-Pose and Vilalta-Bufi 2005). When education is matchedwell with one’s job, it puts the knowledge and skills acquired by individuals toappropriate use, furthering job performance and satisfaction (Allen and Van DerVelden 2001). Empirical studies also report that education–job mismatch negativelyimpacts one’s level of job satisfaction (Johnson and Johnson 2000; Vila and García‐Mora 2005).Despite the attention paid to the education–job match as a determinant of job

satisfaction, relatively little attention is paid to research on education–job match andjob satisfaction across sectors. Research attributes the sectoral differences in jobsatisfaction to the distinctiveness in the work context, job characteristics, roleconstraints, and employee values across sectors (Chen 2012; DeSantis and Durst1996; Jung, Moon, and Hahm 2007; Wright and Davis 2003). Most of all, theliterature suggests that public and non-profit employees are more likely to bemotivated by intrinsic rewards than by extrinsic rewards compared to for-profitworkers. Scholars explain that people may stay in government and non-profitorganizations despite some of the disadvantages including the pay gap and shortageof staff and resources because they get satisfaction from fulfilling their intrinsicmotivation, including an opportunity for self-fulfilment and contribution to society(Borzaga and Tortia 2006; Light 2008). Moreover, recent research has found thatthere exists distinctiveness not only between public- and private-sector workers,but also between public and non-profit workers’ motivations (Chen 2012; Lee andWilkins 2011). Therefore, ignoring the differences between the public and non-profit organizations may result in misunderstanding of what affects job satisfactionacross the sectors.This research focuses on comparison among three different sectors of the workforce.

In particular, this study examines attributes of recent college graduates’ job satisfactionacross the public, non-profit, and for-profit sectors, focusing on the level of relatednessbetween an individual’s education and the job. Further, this study investigates theimpacts of education–job match and salary for recent college graduates’ job satisfactionacross the three sectors. The results are especially important given the study partici-pants – recent college graduates.Studies report that approximately four out of ten working-aged Americans (twenty

five to sixty four) have at least an associate’s degree, and the rate of higher educationalattainment will reach almost 50 per cent by 2025 (Matthews 2010). Thus, it is timely

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to examine factors influencing recent graduates’ job satisfaction. With the impendingretirement of the boomers, it is even more necessary to understand career motives andsatisfactions of new college graduates. Studies report that the new generation ofworkers have different expectations in their work and are less likely to stay in theirjob compared to their predecessors (Cennamo and Gardner 2008; Ng, Schweitzer, andLyons 2010; Park and Gursoy 2012). The entry of the new generation into theworkforce, accompanied by the exodus of the boomers, poses a challenge to humanresource managers. At a time when the US is faced with the largest wave of retirement,the results of this study can help human resource managers devise policies that canattract and retain a new generation of employees in these various sectors. In addition,this study includes several individual and job characteristics (training, age, tenure,gender, minority status, supervisory roles, task variety, overtime work, and educationalbackgrounds) noted in the literature to further examine the sectoral differences in jobsatisfaction.

LITERATURE REVIEW: JOB SATISFACTION ACROSS THE PUBLIC, NON-PROFIT, AND FOR-PROFIT SECTORS

Job satisfaction has been of primary interest to researchers; there is an extensive list ofpublications in various fields, including psychology, business, and public administration.Job satisfaction has important behavioural implications including organizationalcitizenship, performance, and retention (Clark 1997; Vroom 1964). As such, scholarshave tried to identify motivational and individual determinants of job satisfaction (Miller1980; Pitts 2009; Wright and Kim 2004). Further, today’s organizations may face evena greater challenge keeping their employees satisfied and managing turnover. Theyounger generation of workers will be replacing the retiring boomers, and moreover,research shows that these workers are more likely to leave their organization than theprevious generation (Ng, Schweitzer, and Lyons 2010; Park and Gursoy 2012).Therefore, human resources managers must prepare themselves for the entry of thenew generations in the workforce to effectively manage employee turnover.The literature suggests that job satisfaction and its attributes may vary across

different sectors of the economy (DeSantis and Durst 1996; Jung, Moon, and Hahm2007; ). Each type of organization has a distinctive structure of extrinsic and intrinsicincentives, with a unique mix of constraints and rewards (Borzaga and Tortia 2006).Public-sector jobs differ from private-sector jobs in regard to salaries, benefits, tasktypes, and performance criteria (Blank 1985; Borzaga and Tortia 2006; Liu and Tang2011; Rainey, Backoff, and Levine 1976). Non-profit jobs also have unique incentivestructures compared with those in the public or for-profit sectors (Kearns 1994; Leeand Wilkins 2011). Different incentives can be used to induce employees to behaveconsistently with the organization’s goals (Fehr, Klein, and Schmidt 2001). The

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variation in incentive mixes, therefore, may contribute to different levels of jobsatisfaction across the sectors. In addition, research suggests that there are motivationaldifferences among employees in the public, non-profit, and for-profit sectors (Goodin2003; Lee and Wilkins 2011; Lyons, Duxbury, and Higgins 2006). Different sets ofpreferences of employees, in turn, correspond to different typologies of incentives(Borzaga and Tortia 2006). As a result, each sector has a unique reward system interms of monetary, non-monetary, and psychological rewards (DeSantis and Durst1996). The different typologies of incentives suggest that workers may also select thesector based on their preference for a reward system (Lee and Wilkins 2011).For instance, Borzaga and Tortia (2006) find that employees in non-profit firms

derive more satisfaction from process-related aspects of rewards such as professionaldevelopment and variety and creativity of the job, and recognition of one’s contributionthan employees in the public and for-profit sectors. Kalleberg et al. (2006) report thatnon-profit and public organizations are less likely to use monetary incentives such asgain sharing and bonuses, but more likely to use autonomous work arrangementsincluding self-directed work teams, controlling for various organizational characteristicssuch as size and industry. In his analysis of French workers, Narcy (2011) also finds thatmonetary incentives have limited effectiveness in the public and non-profit sector, withnon-profit employees being most intrinsically motivated.Locke (1976) views job satisfaction as a perception that fulfils or allows the

fulfilment of one’s job values. While public administration scholars employedperson–organization fit theory in order to examine individuals’ choice of employerand its behavioural consequences, including job satisfaction, in public service organiza-tions (Vandernabeele 2008), little empirical research has examined the match betweenan individual and his or her job across the sectors. Overall, the literature implies thatprivate-sector workers derive more satisfaction from pay and other monetary rewards,while public and non-profit employees derive more satisfaction from intrinsic value oftheir job (Borzaga and Tortia 2006; Liu and Tang 2011). Despite the possibility thatthese values and the importance placed on job attributes differ among government,non-profit, and for-profit workers, little is known about the relative importance of suchintrinsic and extrinsic rewards in determining job satisfaction of employees in each typeof organization. The present study examines how important the match between one’seducation and job is compared to the monetary compensation in the public, non-profit,and for-profit sectors controlling for other job and demographic characteristics.

Education–job match and job satisfaction

Various job characteristics – the nature of the job or the collection of tasks thatcompose the job – affect employees’ job satisfaction (Perry and Porter 1982).Among others, the match between an employee’s educational background and his orher job is known as one of the most important attributes of job satisfaction. The most

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commonly used theories in economics to explain education–job match with salary andjob satisfaction are (a) human capital theory, (b) credentialism theory, and (c) job-match theory. The human capital theory (Becker 1964) argues that individuals with thehighest human capital (education, experience, training, etc.) are most productive andfind jobs with a better fit with their education, which leads to higher salaries and jobsatisfaction (Allen and De Weert 2007; Allen and Van Der Velden 2001). The majorcriticism of human capital theory is that in this day and age where access to education isalmost universal, education in and of itself might not give rise to productive andsatisfied workers. This theory does not take into consideration the mismatch betweenskills acquired in college and those required on the job (Allen and De Weert 2007).Credentialism theory, on the other hand, argues that education in and of itself is not adeterminant of salary; however, highly educated individuals tend to get placed in betterjobs despite the skill set required in a job (Collins 1979). As such, the credentials of anindividual are used by employers as a yardstick for employability instead of theknowledge or skills one possesses to do the job. The job-match theory builds on thecriticisms of human capital and credentialism theories to suggest that education–jobmatch can result in employees finding jobs that match their skills and knowledge, thusproviding them with a sense of usefulness and security, ultimately leading to higher jobcontrol and job satisfaction (Jovanovic 1979; Sørensen and Kalleberg 1981; Van DeWerfhorst 2002).In job-match theory, person–job fit is defined as the congruence between an

individual’s knowledge, skills, and abilities and the demand of the job or betweenthe needs and desires of an employee and what is provided in a job (Edward 1991). Thefirst form of person–job fit is often labelled as demands–abilities fit, and it occurs whenemployees’ knowledge, skills, and abilities are commensurate with what the jobrequires (Kristof-Brown, Zimmerman, and Johnson 2005). The research suggests thatthe match between the skills and knowledge that an individual possesses and his or herjob requirements results in positive work outcomes, such as high job satisfaction, lowturnover, and high performance (Meglino, Ravlin, and DeNisi 2000; Phillips 1998).While individuals may get the set of skills and knowledge from various sources, themajor source for developing these job-related skills has been postsecondary education(Haveman and Smeeding 2006). Consequently, the congruence between an individual’seducation and what one does on the job affects the level of satisfaction with one’s job.Studies indeed have shown that a match or a mismatch between an individual’seducation and job has significant effects on various labour market outcomes, includingproductivity, job satisfaction, absenteeism, and turnover (Allen and Van Der Velden2001; Vila and García‐Mora 2005; West and Berman 2009).Scholars point out that working in a job requiring one’s own field of education is

what most graduates would strive for because they can make use of their full potentialat work (Allen 2011). Still, a recent report found that a significant portion of recentuniversity graduates worked in jobs that did not match their education (Boudarbat and

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Chernoff 2012). While predetermined factors, such as availability of jobs, educationalcharacteristics, geographic mobility, and immigrant status, affect education–job match(Boudarbat and Chernoff 2012; Hensen, Vries, and Cörvers 2009), employers also haveinfluence on employees’ education–job match through job design and assignment. Theright match between education and job leads to equity with compensation, puts theknowledge and skills acquired by the workers to proper use, enables them to performat a higher level, and consequently increases their satisfaction with their occupation(Allen and Van Der Velden 2001; Vila and García‐Mora 2005). On the other hand, amismatch between a person’s job and education may lead to negative attitudes anddissatisfaction. Research findings show that workers experience distress when he or shebelieves that his or her skills or knowledge is being underutilized in the job (Green andZhu 2010).While the match between one’s education and job increases the satisfaction from the

job, it is possible that education–job match has varying effects on job satisfaction acrossthe sectors. First, research finds that workers in public and non-profit organizations aremotivated by intrinsic rewards, such as serving the public, than by extrinsic rewards,such as salaries and other monetary benefits, compared to workers in for-profit firms(Lewis and Frank 2002; Light 2002). An intrinsically motivated person is assumed toderive enjoyment from the work itself, rather than external pressures or rewards (Ryanand Deci 2000). In other words, public and non-profit employees derive moresatisfaction from doing valuable work than from anything else. Intrinsic motivationtheory further holds that people must experience their behaviour as self-determined, aswell as experience competence or efficacy, in order for intrinsic motivation to be inevidence (Ryan and Deci 2000, 70). Therefore, working on a job that matches one’seducation may wield greater influence over the overall job satisfaction of public andnon-profit employees, who derive more satisfaction from doing an activity itself.

Hypothesis 1: Education–job match has greater positive influence on public- and non-profit-sector employees’ job satisfaction than on for-profit-sector employees’ job satisfaction.

Monetary compensation

Although the notion that high pay leads to high levels of job satisfaction is not withoutdebate (Judge et al. 2010), research often finds that a person’s overall job satisfaction,not just one’s satisfaction with pay, is associated with the pay level than not (Beutell andWittig-Berman 1999; Liu, Thomas, and Zhang 2010). Empirical research generallyshows that failure to provide adequate salaries leads to dissatisfaction and turnover(West and Berman 2009). While most models of pay satisfaction propose a positiverelationship between pay level and pay satisfaction, which, in turn, contributes to jobsatisfaction (Judge et al. 2010), self-determination theory suggests that extrinsicmotivations, such as salary, may undermine workers’ satisfaction to some extent

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(Deci and Ryan 1985). A recent meta-analysis found that pay had modest relationshipwith overall job satisfaction, while work satisfaction had a stronger relationship with jobsatisfaction (Judge et al. 2010).1 The authors employ adaptation-level theory (Helson1947) to explain why pay might not be a strong predictor of overall job satisfaction.According to this theory, individuals adapt quickly to life events, whether it bemarriage or pay increase. Although such events might give an initial boost in levelsof satisfaction, one quickly returns to premarital or pre-pay increase levels, suggestingthat satisfaction associated with such events is ‘psychologically spent,’ thus reducingone’s overall satisfaction. While this study makes no distinction by employment sector,recent research on public and non-profit organizations suggests that the effectiveness ofpay as a determinant of job satisfaction differs across sectors (Sabry 2010).Specifically, studies report that employees in the for-profit sector are highly moti-

vated by extrinsic benefits such as salary (Crewson 1997; Rainey 1983; Wittmer 1991),while public and non-profit employees are motivated by the nature and meaningfulnessof their work rather than monetary compensation (Benz 2005; Lewis and Frank 2002;Light 2008). Analysing secondary data from three large surveys, Crewson (1997)reported that private-sector employees were more likely than their public-sectorcounterparts to choose higher salary as an important job characteristic. Moon (2000)further found support for salary as a motivator for private-sector managers, while senseof achievement and importance of work (intrinsic factors) motivated public managers.Chetkovich (2003) and Taylor (2005) also reported that salary was more important touniversity graduates who wanted to work in the private sector, while it was lessimportant to graduates who expressed interest working for the public sector. Studiesalso find that non-profit employers largely depend on employees who are more likely tobe motivated by intrinsic rewards, such as serving the needy and accomplishing values,and less motivated by intrinsic rewards such as monetary compensation and benefits(Leete 2000; Mirvis 1992). Overall, the literature implies that the employmentrelationship in the for-profit sector is more dependent on transactional contractsthat are based on the exchange of economic currency, compared to the public andnon-profit sectors (Chen 2012). Therefore, direct monetary rewards are less enticingto public- and non-profit-sector employees, while they are important motivators forfor-profit workers.

Hypothesis 2: Salary has greater positive influence on for-profit-sector employees’ jobsatisfaction than public- and non-profit-sector employees’ job satisfaction.

This study investigates the role of education–job match and monetary compensationin determining job satisfaction in the for-profit, non-profit, and public sectors. Inaddition to these two factors, this study controls for various work-related factorssuch as participation in work-related training, salaries, supervisory roles, task variety,job tenure, overtime work, as well as demographic and educational backgrounds.

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DATA AND METHODS

This study examines various attributes of job satisfaction in the public, for-profit, and non-profit sectors using data from National Science Foundation’s 2006 National Survey ofRecent College Graduates (NSRCG). NSRCG is a biennial survey conducted by theNational Science Foundation since 1974. It is a cross-sectional survey of bachelor’s ormaster’s degree holders from a US institution who majored in various fields: biological/agricultural/environmental life sciences, computer and information sciences, mathematicsand statistics, physical sciences, psychology, social sciences, engineering, and health. Thesampling frame is constructed from the Integrated Postsecondary Education Data System,which is maintained by the National Center for Education Statistics that includes a cross-sectional sample from 300 US institutions. The scope of this study is limited to paidemployees in the public, for-profit, and non-profit sectors. Individuals who were self-employed or not in labour force are not included in the analysis. The overall response ratefor the 2006 survey was 68.2 per cent. This study also limits its scope to those who worked35 hours or more weekly, as their reasons for participating in the labour force, attitudes andvalues, or other factors influencing their job satisfaction may differ from those of part-timeworkers (Conway and Briner 2002). The present study examines whether and howimportance of education–job match and monetary compensation as determinants of jobsatisfaction differs across the sectors, and estimates a separate equation for each sector.

VARIABLES

Dependent variable

The dependent variable is whether a respondent was satisfied with his or her job in general. TheNSRCG asked respondents to rate their overall satisfaction with their job on one of thefollowing four categories: very satisfied, somewhat satisfied, somewhat dissatisfied, and verydissatisfied. This study employs the binary probit regression,2 with the dependent variabletaking the value of 1 if one was very or somewhat satisfied with his or her job, and 0 ifsomewhat or very dissatisfied. While single measures of job satisfaction remain controversialbecause of reliability concerns, the use of a single-item measure remains acceptable if theconstruct is specific and clear (Sackett and Larson 1990). Single-item measure and scalemeasures of job satisfaction have been shown to have high correlation (0.67) in a meta-analysis conducted by Wanous, Reichers, and Hudy (1997). The authors argue thatsingle-item measures of job satisfaction should not be regarded as a major limitation andflaw by the reviewers. They highlighted several advantages of using a single-item measureof overall job satisfaction, stating that single measure item measures occupy less space, arecost-effective, and have better face validity. Scholars also point out that multiple-itemmeasures combining several facets of job satisfaction into one index may lead to wrong

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conclusions because it is highly unlikely that all of the items used to compose the scale areof importance to all employees (Nagy 2002; Scarpello and Campbell 1983).Furthermore, single-item measures of job satisfaction continue to be used by severalscholars of public administration (Caillier 2012; Choi 2011; Grissom, Nicholson-Crotty,and Keiser 2012; Taylor and Westover 2011; Van Ryzin 2014).

Independent variables

Education–job matchThe first independent variable is the degree of relatedness between an individual’s major andprincipal job. Numerous studies report that people derive more satisfaction from perform-ing their jobs when their jobs are related to their education (Allen and Van Der Velden2001; Vila and García‐Mora 2005).While existing research focused on education level, thatis, match between years of schooling and the schooling required for the job, scholars haveexpressed concerns about the limitation of this measure (Robst 2007; Sloane 2003). Sincejob satisfaction is a measure of individual preferences and values, inclusion of a measure ofeducation–job match rather than the level of education better informs individual jobsatisfaction (Badillo-Amador and Vila 2013; Vila and García‐Mora 2005). The NSRCGasks the respondents to rate the extent to which their work is related to their highesteducational degree, offering three categories: not related, somewhat related, and closely related.The answer is dummy-coded, with not related as the base category.

Monetary compensationResearch suggests that the importance of salary as an attribute of job satisfaction variesamong the public, non-profit, and for-profit sectors (Burgess and Ratto 2003). Thisstudy uses the natural logarithm of an individual’s annual salary as the second indepen-dent variable.3 The NSRCG asks an individual’s basic salary in dollar terms, excludingbonuses, overtime, or other additional compensation.

Control variables

The model also includes the following job attributes and personal characteristics on jobsatisfaction in each sector.

Work-related trainingResearch suggests that training content and its effects may differ across the sectors, as themajority of training programmes in government are offered to ensure legal compliance,

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while training in the private sector is often equated with future worth to the organization(Berman et al. 2012). This study controls for whether a respondent participated in work-related training (1 if a respondent participated in training and 0 otherwise).

Age and job tenureThis study is limited in testing age-specific effects on job satisfaction because there islittle age variation among recent college graduates. Nevertheless, the present study canexamine how levels of job satisfaction change in employees’ early careers across thethree sectors. Respondents are categorized into three groups: those who had been intheir organization for fewer than two years, between two to four years, and for morethan four years, with the first group as the base category. Both an individual’s age andthe time spent with his or her organization are included in the analysis.

GenderThere has been little consistency in explaining the gender effect on job satisfaction(DeSantis and Durst 1996; Jung, Moon, and Hahm 2007). Some report that womenhave higher levels of satisfaction (Bender, Donohue, and Heywood 2005; Jung, Moon,and Hahm 2007), while others find no significant difference (Clark 1997) or lowersatisfaction among women compared to men, especially among young, college graduateprofessionals (Mora and Ferrer-i-Carbonell 2009). Moreover, the gender effect on jobsatisfaction may differ across the three sectors, as women may undergo dissimilarexperiences in each sector (Hakim 2000; Lee and Wilkins 2011). This model controlsfor one’s gender (1 if female and 0 otherwise).

Minority statusResearch suggests that minorities face greater barriers in the workforce regardless ofsector and that racial and ethnic minorities have lower levels of job satisfaction comparedwith non-minorities (Selden and Selden 2001; Verkuyten, Jong, and Masson 1993). Adummy variable for being a racial minority is included (minority = 1, non-minority = 0).

Task varietyWhile research suggests that job variety increases job satisfaction (Oldham and Hackman2010), the magnitude of the effect may vary depending on organizational imperatives.Public-sector jobs are designed to provide clear rules and responsibilities to promoteequitable treatment of citizens, while non-profit organizations tend to serve morenarrowly defined clienteles, trying to be more responsive than equitable (Lipsky andSmith 1989). In the for-profit sector, the bottom line of profit maximization requires

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employees to put on different hats depending on environmental forces. The modelcontrols for whether an individual was conducting five or more different tasks on thejob (1 if one does so, and 0 otherwise).

Supervisory roleA national survey of undergraduates (born after 1980) in Canada found that the youngergenerations place emphasis on attaining rapid advancement and developing new skills(Ng, Schweitzer, and Lyons 2010). Early public management research finds that public-sector supervisors are less satisfied than private-sector supervisors in similar fields andindustries (Rainey 1979) and that these two groups have different preferences andmotivations (Karl and Sutton 1998). To test the effects of taking a supervisor roleacross the sectors, the model controls for supervisory status (1 if a respondent super-vises other people on the job, 0 otherwise).

Working overtimeStudies report that the recent graduates have pragmatic expectations from their jobs andare more likely to seek work–life balance than the previous generations (Downing2006; Ng, Schweitzer, and Lyons 2010). Hence, overtime work may have negativeimpacts on job satisfaction. This model controls for whether an individual worked morethan 40 hours a week (1 if so, 0 otherwise).

Educational levelResearch suggests that people with higher educational attainment experience dissatisfactionwith their work conditions because they have invested more time and resources in theireducation, and therefore higher expectations regardless of their skill levels (Green and Zhu2010; Liu, Thomas, and Zhang 2010). In contrast, Berk (1985) proposes that people withhigher educational level have higher levels of job satisfaction because they have more pridein their career and their education is recognized in their workplace. The model controls forwhether a person had a graduate degree (1 if one has a graduate degree, and 0 otherwise).

Student debtFinancial pressures from student debt may affect the quality of life of the newlyemployed (Brown, Taylor, and Price 2005). These pressures may force an individualto take a job that he or she does not want most, perhaps resulting in lower levels of jobsatisfaction. Thus, this study controls for whether an individual had educational debt atthe time of the interview (1 if a respondent still owed money at the time of the survey,and 0 otherwise).

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RESULTS

Table 1 shows that government employees were slightly more satisfied with their jobsthan employees in the non-profit and for-profit sectors with for-profit-sector employeesbeing least satisfied. While more than half (50.9 per cent) of the public employeesexpressed higher level of satisfaction with their current jobs, 46.2 per cent of non-profitworkers and 44.8 per cent of for-profit workers did so. While the differences in jobsatisfaction are not impressively large, considerable differences are observed in terms ofthe relatedness between one’s education and job across the sectors (see Table 1). Whileapproximately half of the for-profit workers (50.3 per cent) reported high levels ofeducation–job match, a vast majority of public (66.6 per cent) and non-profit (63.3 percent) employees reported high levels of match. The percentage of employees whoreported education–job mismatch (education and job are not related) was higher in thefor-profit sector (18.9 per cent) than in the non-profit (12.8 per cent) and public (10.4per cent) sectors. Table 1 shows that the average annual salary for a for-profit workerwas $50,884.7. Public and non-profit workers earned less than 80 per cent of the for-profit average salary ($39,971.5 and $39,202, respectively).The binary probit regression estimates in Table 2 show that education–job match is

significantly and positively associated with employees’ overall job satisfaction in all ofthe three sectors. That is, a person is more likely to be satisfied with the job when the

Table 1: Descriptive statistics (N = 11,525)

Characteristics For-profit (n = 6,626) Non-profit (n = 1,689) Public (n = 3,210)

Job satisfaction Dissatisfied 14.0% 7.4% 8.9%Satisfied 86.0% 88.6% 91.1%

Education–job match Not related 18.9% 12.7% 10.4%Somewhat related 30.8% 23.9% 23.0%Closely related 50.3% 63.4% 66.6%

Racial minority 27.5% 27.1% 26.3%Female 40.6% 64.0% 54.8%Education loan 55.2% 60.2% 59.7%Having a graduate degree 27.5% 37.4% 41.9%Working more than 40 hours a week 49.0% 39.4% 37.1%Task variety 38.9% 36.9% 33.9%Supervisory role 26.8% 25.0% 22.4%Work-related training 65.9% 70.5% 74.3%Time spent in current

organizationLess than 2 years 55.2% 50.2% 45.7%2–4 years 34.9% 36.9% 37.7%4 or more years 9.9% 12.9% 16.6%

Annual salary $50,893.2 $39,963.8 $39,183.0

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job is closely related to his or her education. The average partial effects4 in Table 3reveal that when one’s education is closely related to his or her job, an employee in thefor-profit sector is 18.8 per cent more likely to be satisfied with one’s job compared tohis or her colleague whose education is not related to the job, 16.8 per cent more likelyin the non-profit sector, and 15.5 per cent more likely in the public sector. Thesefindings suggest that, contrary to the hypothesis, close match between one’s educationand job has a greater positive influence on job satisfaction in the for-profit sector than inpublic and non-profit sectors.The findings suggest that salary has a positive impact on for-profit-sector workers’

job satisfaction, while it does not affect job satisfaction in the non-profit and the publicsectors. Specifically, a 1 per cent increase in a for-profit worker’s annual salaryincreases the likelihood of high job satisfaction by 5.0 per cent. Figure 1 provides

Table 2: Probit regression results (Y = Satisfied with one’s job)

For-profit (n = 6,626) Non-profit (n = 1,689) Public (n = 3,210)

LR Chi2 (16) = 604.78 LR Chi2 (18) = 99.15 LR Chi2 (18) = 132.01Prob > Chi2 = 0.0000 Prob > Chi2 = 0.0000 Prob > Chi2 = 0.0000

Variables Pseudo R2 = 0.184 Pseudo R2 = 0.130 Pseudo R2 = 0.104Education–job closely related 0.940*** (0.055) 0.826*** (0.115) 0.851*** (0.091)Education–job somewhat

related0.396*** (0.053) 0.480*** (0.124) 0.380*** (0.098)

Being minority −0.046 (0.046) −0.124 (0.093) −0.009 (0.074)Being a female −0.084* (0.042) −0.288** (0.094) −0.131* (0.067)Age 0.000 (0.004) 0.003 (0.006) −0.001 (0.005)Education loan −0.136** (0.042) −0.159 (0.089) −0.189** (0.068)Having a graduate degree −0.069 (0.053) −0.075 (0.095) −0.131 (0.071)Working more than 40 hours a

week−0.046 (0.043) 0.092 (0.091) −0.049 (0.069)

Task variety 0.109* (0.044) 0.174 (0.093) 0.146* (0.072)Supervisory role 0.110* (0.048) 0.091 (0.101) −0.039 (0.078)Work-related training 0.181*** (0.043) 0.050 (0.094) 0.065 (0.075)2–4 years in current

organization−0.090* (0.045) 0.061 (0.093) −0.079 (0.072)

4 or more years in currentorganization

−0.173* (0.075) −0.088 (0.139) 0.045 (0.105)

Log(annual salary) 0.253*** (0.039) 0.156 (0.082) 0.107 (0.062)Constant −2.094*** (0.415) −0.735 (0.820) −0.139 (0.625)

Notes: Numbers in parentheses are standard errors.*p ≤ 0.05.**p ≤ 0.01.***p ≤ 0.001.

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more insights about the importance of education–job match and salary as determinantsof job satisfaction. Figure 1 demonstrates how the probability of job satisfaction changesas the logarithm of salary increases between those with high education–job match andthose with education–job mismatch in the for-profit, non-profit, and public sectors. Asshown in Figure 1, the gap in the predicted probability of job satisfaction between thehigh-match group and poor-match group is larger in the for-profit sector than in thenon-profit and public sectors. However, the difference between the two groups’predicted probability of job satisfaction narrows rapidly with higher salary in the for-profit sector while the gap remains relatively stable in the non-profit and public sectors.These findings suggest that while for-profit employees may experience greater jobdissatisfaction from poor education–job match, it can be overcome with satisfactionfrom salary increase. On the other hand, although public and non-profit workersexperience less dissatisfaction from education–job mismatch, higher salary does notincrease their likelihood of job satisfaction as much as it does in the for-profit sector.An interesting finding is that participation in work-related training is positively

associated with job satisfaction in the for-profit sector, while it has no significant effectin the non-profit and public sectors (Table 2). Table 3 indicates that for-profit employ-ees who participated in work-related training are 3.7 per cent more likely to reporthigh job satisfaction than those who did not participate. This result suggests that jobtraining has distinct effects on employees’ job satisfaction across the sectors.

Table 3: Average partial effects: change in the probability of job satisfaction

Variables For-profit Non-profit Public

Education–job closely related 0.188*** (0.004) 0.168*** (0.008) 0.155*** (0.020)Education–job somewhat related 0.075*** (0.006) 0.076*** (0.011) 0.052*** (0.012)Being minority −0.009 (0.008) −0.023 (0.016) −0.001 (0.011)Being a female −0.017* (0.008) −0.049** (0.016) −0.020* (0.010)Age 0.000 (0.001) 0.000 (0.001) −0.000 (0.001)Education loan −0.027** (0.008) −0.028 (0.015) −0.028** (0.010)Having a graduate degree −0.014 (0.010) −0.013 (0.016) −0.020 (0.011)Working more than 40 hours a week −0.009 (0.008) 0.016 (0.014) −0.007 (0.011)Task variety 0.021** (0.007) 0.030** (0.013) 0.021** (0.010)Supervisory role 0.021** (0.008) 0.016 (0.014) −0.006 (0.012)Work-related training 0.037*** (0.006) 0.009 (0.014) 0.010 (0.012)2–4 years in current organization −0.018* (0.009) 0.011 (0.014) −0.012 (0.011)4 or more years in current organization −0.037* (0.015) −0.016 (0.024) 0.007 (0.015)Log(annual salary) 0.050*** (0.007) 0.028 (0.013) 0.016 (0.009)

Notes: Numbers in parentheses are standard errors.*p ≤ 0.01.**p ≤ 0.05.***p ≤ 0.001.

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Table 2 also shows that women are less likely to report satisfaction with their jobsthan their male colleagues regardless of the sector in which they are employed. Thisresult corroborates recent findings reporting that female college graduates are moredissatisfied with their job than their male counterparts (Mora and Ferrer-i-Carbonell2009). Somewhat surprisingly, the negative gender effect on job satisfaction are moresubstantive in the public and non-profit sectors than in the for-profit sector. Whilewomen are 1.7 per cent less likely to be satisfied with their job than their malecounterparts in the business sector, non-profit women are by 4.9 per cent andgovernment women are by 2.0 per cent less likely to do so than their male colleagues(Table 3). Unlike common perception that public and non-profit organizationsembrace diversity, gaps between women and men in job satisfaction are greater inthose organizations compared to for-profit firms. Table 2 indicates that the differencein the likelihood of job satisfaction between white and racial minorities is notstatistically significant. In summary, women who recently graduated from collegesare less likely than their male counterparts to be satisfied with their jobs in the non-profit and public sectors, as compared with the for-profit sector. This finding impliesthat scholars and practitioners need to revisit policies regarding women in public andnon-profit organizations.The findings show that the variety of task increases the likelihood for high job

satisfaction in all three sectors. Those who said they had more than five differenttasks are more likely to be satisfied with their job by 2.1 per cent in the for-profit sector, 3.0 per cent in the non-profit sector, and 2.1 per cent in the publicsector (Table 3). Working on diversified tasks enlarges the scope of a job byextending the responsibilities within the same position (Berman et al. 2012; Katzand Kahn 1966; Orpen 1979; Umstot, Bell, and Mitchell 1976). The results arein line with the findings of Ng, Schweitzer, and Lyons (2010) and Dede (2005),whose studies found that young graduates are eager to learn new skills and areable to multitask.For-profit employees with supervisory positions are 2.1 per cent more likely to be

satisfied with their jobs than those in non-supervisory positions (Table 3). However,assuming a supervisory role does not influence employees’ job satisfaction in govern-ment and non-profit organizations. Although the analysis is limited in drawingconclusions, the results suggest that public and non-profit managers may confrontmore challenges in their jobs compared to managers in business firms. Table 2 showsthat, compared to those who just started, employees’ job satisfaction tends todecrease in the for-profit sector over time. In the non-profit and public sectors,time spent in the current organization does not influence employees’ job satisfaction.This difference in satisfaction depending on tenure may be due to the differentperception regarding job security across the sectors (Jung, Moon, and Hahm2007). For-profit employees in general have less confidence in job security than

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employees in the non-profit and public sectors, and a sense of insecurity may increaseas time goes by in the for-profit sector.

CONCLUSION AND DISCUSSION

This study examines the relative importance of education–job match and salary forrecent college graduates working in the public, non-profit, and for-profit sectors. Theresults suggest that some sectoral differences exist, as non-profit- and public-sectoremployees are more likely to have a job that matches their education than for-profitworkers. Two different scenarios can be considered to explain higher levels of educa-tion–job match in the non-profit and public sectors. First, public and non-profitworkers may more actively seek jobs that match their education compared to thosewho want to work in the for-profit sector. Because they are more intrinsicallymotivated by the job itself (Vandernabeele 2008), rather than by the monetary benefitsassociated with the job, it is possible that education–job match is a more significantdeterminant in career choice. The other possible scenario is that public and non-profitemployers are better able to find or design jobs that match employees’ education thanfor-profit employers. Due to the flatter organizational structure of non-profits, non-profit managers may have more flexibility to adjust work arrangements for theiremployees in order to better match a candidate’s education. The higher education–job match in the two sectors may also reflect the concern for the well-being ofworkers, rather than for profit margins, of public- and non-profit-sector managers(Gould-Williams 2004) and their efforts to match subordinates’ job and educationalbackground. Government agencies may have more systematically classified occupationsthan non-profits, enabling job seekers to find better matches between their educationand jobs. Although providing a conclusion about which scenario is more plausible thanthe other does not fall within the scope of this study, the findings do suggest thatemployers try to match employees’ jobs with their fields of education in order toincrease employee job satisfaction. Research also suggests that applicants’ perception ofjob and organizational fit increases the likelihood of job acceptance decisions andpositive attitudes towards organizations (Carless 2005; Judge and Cable 1997).According to the National Center for Education Statistics (2011), it cost an averageof $13,600 in tuition, room, and board to attain a bachelor’s degree in a US publicinstitution in the 2010–2011 academic year. With society’s resources (i.e. tax dollars)put into postsecondary education, failing to match an employee’s education with his/her job is a waste from a public policy standpoint as well.Overall, the results suggest that the importance of education–job match and

monetary compensation as attributes of job satisfaction is different across sectors. Theexpected finding is that salary levels have weaker influence on public- and non-profit-sector workers’ job satisfaction, as compared with for-profit employees. Somewhatsurprisingly, education–job match seems to be more important for for-profit workers’

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job satisfaction compared to non-profit- and public-sector employees, while education–job match has a significant and positive influence on job satisfaction of employees in allthree sectors. This study cannot rule out the possibility that education–job match hasdistinctive effects on a person’s salary across the sectors. For instance, having aparticular degree may have a higher pay-off in the for-profit sector, and thereforefor-profit employees derive more satisfaction from the education–job match. Futureresearch may examine how an employee’s satisfaction with various dimensions of a jobweighs in determining one’s overall job satisfaction across the sectors and what mayexplain the sectoral differences.The results imply that for-profit employees are more likely and able to make

up the dissatisfaction from mismatch with the satisfaction derived from highersalaries. This may be the reason why reported job satisfaction levels are notdramatically different despite the significantly higher levels of the education–jobmatch in the government and non-profits. Despite the importance of education–job match in job satisfaction of for-profit employees, they are not doing badly interms of the overall job satisfaction due to the higher salary in the for-profitsector and its greater impact on their job satisfaction compared to the non-profitand public sectors. In sum, the findings of this study indicate that non-profit andpublic employees are doing the work that matches their education and derive agreat amount of satisfaction from it. For-profit employees compensate their loss inthe satisfaction due to the mismatch between education and job with their gain inthe satisfaction derived from salary. Without other motivational information,however, this study is limited in generalizing the findings.Additionally, the analysis shows that women, overall, are less satisfied with their job.

Contrary to the common perception that government and non-profit organizations arebetter places for women to work (Bihagen and Ohls 2006), the results suggest that thegender discrepancy in job satisfaction is larger in the public and non-profit sectors.Further study is required to better understand what causes lower job satisfaction amongfemale workers, especially in government and non-profit organizations. For instance,future study may examine the gender differences in regard to the impacts of variousintrinsic and extrinsic rewards in these organizations compared to for-profitorganizations.Another finding to note is the difference in the effects of work-related training

between for-profit and non-profit/public sectors. While work-related training ispositively associated with job satisfaction in for-profit organizations, it does nothave significant correlation with job satisfaction in the non-profit and public sectors.Studies on job satisfaction in the for-profit sector show a positive relationshipbetween job training and productivity, which leads to increased job satisfactionamong employees (Chowdhury et al. 2012; Schmidt 2007; Tooksoon 2011).Although this study is limited in analysing the contents of trainings that an individual

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receives, research explains that majority of training programmes in government aredesigned to ensure legal compliance rather than improving employee performanceand productivity (Berman et al. 2012). Berman et al. (2012) also point out that manygovernment organizations have decentralized their training programmes and this hasundermined the quality of training public employees receive, which in turn maynegatively affect the job satisfaction of the recent colleague graduates working in thesectorThe findings by no means suggest that public and non-profit workers’ commitment

to serving the public interest or helping the underprivileged has no influence on theirjob satisfaction. Rather, the results of this study should be interpreted with caution, asthis study cannot control for other important factors affecting job satisfaction, such asrelationships between supervisors and subordinates, person–group fit, and other workenvironments. The salary variable, for instance, does not include bonuses or otheradditional compensation, though they are often the key element in the compensationpackages in the for-profit sector. Similarly, there are several benefits offered to public-sector employees that are not included in the salary data in NSRCG. The low pseudo R2

values (0.104–0.184) also suggest that attributes in the model provide only a partialexplanation of job satisfaction. The findings also show that the R2 value is higher in thefor-profit sector than in the non-profit and public sectors, suggesting that for-profit-sector employees’ job satisfaction is better explained by the existing variables. In otherwords, public and non-profit workers’ job satisfaction may be influenced by otherthings, perhaps intrinsic motivations, as the literature suggests. Nevertheless, webelieve that partial explanation is more useful than no explanation, and the results ofthis study suggest that one should not neglect the role of human capital, job design, andmanagement in employees’ job satisfaction.While the NSRCG survey degree recipients represent a wide variety of disciplines,

including science, engineering, health, social and related sciences,5 as well as non-science and engineering fields, the findings of this study may not be generalized tocollege graduates from non-US institutions. Another limitation of this study is thatthe data are cross-sectional and thus temporal in nature. Future studies shouldconsider the use of longitudinal data to measure the job satisfaction level of graduatesacross time. This study also cannot rule out the possibility that the industry structurein each sector contributes to the level of relatedness, and therefore results indifferences in the link between education–job match and job satisfaction. However,this study may provide insights into the roles of education–job match and monetarycompensation in determining one’s job satisfaction. More importantly, by examiningthe factors influencing recent graduates’ job satisfaction, this study contributes to theimproved understanding of the career-related expectations of the new generationworkers, who are increasingly replacing baby boomers in all three sectors of theeconomy.

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NOTES1 The authors searched PsycINFO database (1887–2007) for key words related to satisfaction, pay, earnings,

money, salary, and compensation that resulted in 1,156 abstracts including both journal articles and bookchapters.

2 The authors also ran the ordinal probit regression with the levels of job satisfaction as the dependent variable,and the results did not have different implications from the binary probit regression results. However, theauthors performed the test of parallel regressions assumptions and concluded that the ordinal probit is notappropriate, given the significance of the test (suggesting that we reject the null hypothesis that there is nodifference in the coefficients between the models).

3 Taking the logarithm of variable tends to convert exponential trends to linear trends, offering a linearexplanation of the model. Logging also reduces the effects of outliers due to the shape of the log function. Inaddition, changes in the natural logarithm are almost equal to percentage changes in the original series,simplifying the explanation of the results.

4 With marginal effects, the probability differences are derived using the mean values for any independentvariables whose values have not been fixed in the margins command. The use of means when computingmarginal effects is criticized because it is sometimes impossible to have a mean value (e.g. for the cases ofdummy variables) and because no real person may actually have mean values on all the measures. On theother hand, with average partial effects, the probability differences are computed as means of marginal effectsevaluated at each observation (Bartus 2005).

5 Social sciences include majors from economics, political and related sciences, sociology, anthropology, andothers.

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