Higher education policy and manpower training have failed to meet the requirement of rapidly changing society and employers’ expectation in Taiwan, resulting in a significant gap between university education and employment. Student employability should also be a focus of all higher education institutions, although whether a high degree of student learning outcomes can represent a high degree of student employability is still unclear. This study explores the relationships among pedagogy for employability, the problem-based teaching mode, absorptive capacity, and student employability in higher education institutions (HEIs). Based on analysis of a total sample of 553 undergraduates from 16 Taiwanese HEIs using structural equation modeling, the results show that the influences of pedagogy for employability and the problem-based teaching mode on absorptive capacity and student employability are positively statistically significant. Based on the findings, specific suggestions and managerial implications for HEIs, curriculum and instruction planning, and future research are provided.