The interpretation of graduate mismatch manifested either as over-education or as over-skilling remains problematical. This article analyses the relationship of educational and skills mismatch with pay, job satisfaction and job mobility using unique data from the Household, Income and Labour Dynamics in Australia (HILDA) survey. Over-education and over-skilling are found to be distinct phenomena and their combination results in the most severe negative labour market outcomes. Using panel methodology reduces strongly the size of many relevant coefficients, questioning previous cross-sectional results in the literature. The article shows that the relationship between mismatch and labour market outcomes is strongly influenced by unobserved heterogeneity.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ABSTRACTThe Problem of Overskilling in Australia and Britain * This paper examines the parallel trends in education and labour market developments in Australia and Britain. It uses unique information in the WERS and HILDA surveys on reported overskilling in the workplace. To a degree, the overskilling information overcomes the problem of unobserved ability differences and focuses on the actual job-employee mismatch more than the conventional overeducation variables can. The paper finds that the prevalence of overskilling decreases with education at least for Australia, but the wage penalty associated with overskilling increases with education. Although the general patterns of overskilling (prevalence and penalties) are fairly similar between Australia and Britain, the problem appears to be greater in Britain.JEL Classification: J24, J31