The social stratification process is analyzed from a theoretical point of view, with assumptions tested with empirical evidence from the International Institute for Educational Planning project in developing countries or with information obtained through the researcher's prior studies on industrialized countries. The significant, and often negative, consequences due to the problem of social stratification are discussed in relation to the educational and occupational careers of educated youth. The subject is introduced by noting linkage between education and employment, egalitarian policies in education, and a historical perspective. Egalitarian philosophies in education are considered along with aspects of the equality problem relevant to developing countries. The role of formal education as a social stratifier is explored. A comparative perspective on education and social stratification in developing countries as well as differences between developed and developing countries with regard to social stratification are offered. Information is included on university graduates in developing countries focused on social background and social destination. Among the conclusions are: social stratification in all societies is enhanced by competition, selectivity and a meritocratic reward system; because institutions of higher education in developing countries serve subsistence economies with a limited modern sector, their post-primary enrollment patterns have no historical parallel in the developed economies; and home background in third-world countries tends to have less impact on access, survival, and outcomes of secondary and higher education than in industrialized countries. Tables and references are provided, and 50 references are appended. (SM)