Vertical, Horizontal and Residual Skills Mismatch in the Australian Graduate Labour Market

Abstract

Studies of the Australian graduate labour market have found a substantial incidence of, and significant earnings effects from, vertical mismatch. This study extends the literature by examining horizontal mismatch, an important dimension of mismatch in its own right and which has been less studied. Over a quarter of Australian graduates are found to be mismatched, although the incidence is reduced in the longer term. Graduates from fields of study which are more occupation‐specific were found to be less likely to be mismatched. Earnings penalties were found for all forms of mismatch, and affected both general and specific fields of study.