While expanding higher education is an important component of women's agency development, subsequent employment in the labour market remains an impediment to realising gender equality in many developing countries. In Bangladesh, while the rate of women's higher education completion has steadily increased, employment has not kept pace, resulting in a paradox of declining female labour force participation rates amongst graduates. Therefore, this paper asks: "Does higher education improve women's agency development and empowerment in Bangladesh?" This case study, on the experience of female students at a public women's college in Northern Bangladesh, distinguishes between their instrumental and intrinsic empowerment and identifies key determinants and constraints for their agency development. The research found that female students improved their intrinsic, but not their instrumental empowerment, because of four factors: stereotyped subject selection, limited IT competence, a lack of relevant job skills and limited career aspirations. In order to improve gender equality, the study recommends greater educational investment to improve the quality of female higher education, so that graduates develop the capabilities to meet labour market requirements, thereby narrowing the gap between their agency development and labour force participation.