Training Specificity and Occupational Mobility: Evidence From German Apprenticeships

Apprenticeships play a key role in enabling successful school‐to‐work transitions in many countries, but in the presence of imperfect information, the specificity of this type of training may entail important costs fo...

Apprenticeships play a key role in enabling successful school‐to‐work transitions in many countries, but in the presence of imperfect information, the specificity of this type of training may entail important costs for those working outside their training fields. I study this issue in one of the most prominent training settings, the German apprenticeship system. Using administrative data and a broad occupational classification, I find that 40% of individuals work in occupations different from their training. I estimate the cost of mismatch using vacancy instruments and extend methodological approaches in high‐dimensional selection settings. Lacking training in one's occupation entails an average wage penalty of 14%, the equivalent of two years of work experience. The penalty increases with the task distance between training and occupation. My findings suggest that retraining is crucial to mitigate the adverse consequences from imperfect information in specialized training settings.