Reallocation patterns across occupations in Germany

- Reallocation costs in terms of unemployment duration are high.
- Workers that switch occupation out of unemployment face wage losses.
- The wage loss persists for approximately 5 years after the switch.

Using high-quality German administrative data, I analyze workers' opportunity costs of reallocation across occupations by measuring the additional time spent in unemployment before being hired in a new occupation. Furthermore, I inspect the wage changes after reallocation and find that workers who change occupations through unemployment face wage losses that appear to be persistent over a 5-year horizon.