It is often argued that the expansion of higher education, which has doubled the annual flows of college and university graduates onto the Hungarian labour market, is inevitably conducive to high unemployment among high-skilled youth, and/or a dramatic fall in their returns from higher education. The paper looks at the evolution of the employment, unemployment, and relative wages of graduates from higher education, using data from the Labour Force Survey (1995-2003) and the Wage Survey (1992-2004). The analysis relates to age cohorts across and within occupations, and discusses the possible effects on older and less skilled workers. Young people's returns on higher education increased substantially in 1992-2000, and fell thereafter, especially in the business sector. Workers with a secondary-school background lost jobs and experienced falling relative wages in occupations subject to huge inflows of university graduates. However, the employment ratios were rising and unemployment falling, among university graduates and among less educated workers 'ousted' by them. The results suggest that after a decade of skill upgrading and excess demand for highly skilled youth, the markets are now moving along more or less stable demand curves.