In this paper, we analyze the effect of graduate education on securing an initial job in the Japanese youth labor market. Our study uses the data set of a web monitoring survey that targets the students of Japanese higher education institutions; the survey was conducted in August 2011. If education is the best investment for individual economic success, then graduate degrees are expected to provide individuals with high-earning job opportunities. In Japan, however, there is little literature that compares the job-hunting process of graduate students with that of their competitors who lack similar educational qualifications. This study was undertaken to more accurately measure the effect of graduate education on securing a job. The empirical results show that a graduate degree in the natural sciences leads to a higher increase in the probability of securing a job than is the case with a bachelor’s degree in any field. In contrast, on controlling for potential bias, a graduate degree in the liberal arts or social sciences does not provide students with an advantage in getting an initial job. Our findings suggest that the occupational structure of the Japanese youth labor market does not necessarily have the capacity to absorb the rising number of the graduate students. Further, suspicions are raised about the occurrence of overeducated workers who have graduated in the fields of liberal arts and social sciences.