Abstract

Rapid technological change took place over the last centuries and more is expected to come. Structural change tends to broadly shift labor demand across occupations. Due to limited transferability of skills and abilities across occupations, there exists a mobility friction in the labor market. By using the German administrative data and a proposed approach of “skill remoteness”, we measure the skill distance between occupations in local labor markets. We find that workers with a higher skill-remoteness have persistently lower earnings after layoff and are more likely to change occupation.