The interpretation of graduate mismatch manifested either as overeducation or as overskilling
remains problematical. This paper uses annual panel information on both educational and
skills mismatches uniquely found in the HILDA survey to analyse the relationship of both
mismatches with pay, job satisfaction and job mobility. We find that overeducation and
overskilling are distinct phenomena with different labour market outcomes and that 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-section results and suggesting the presence of considerable unobserved heterogeneity
which varies by gender.