One out of three European employees is either over- or under-qualified, with the mismatch especially high in Mediterranean countries. The results show that countries with higher-skill mismatches share some common characteristics. They tend to have lower levels of public investment in education and training, which might reduce their quality and ability to respond to changing labour market needs. They also have lower expenditure on labour market programmes and more rigid and segmented labour markets, as the qualification mismatch predominantly affects younger male workers on non-standard contracts. Young people and immigrants suffer more from over-qualification, while ageing workers are more prone to skills obsolescence.