New research focusing on the French labor market reveals a counterintuitive finding in the long-standing debate over globalization’s impact on workers: employees in highly skilled, specialized positions may be more vulnerable to wage pressures from international competition than their counterparts in more generalist roles. A comprehensive study tracking career paths for over two decades found that specific, high-skill professions, such as engineers and technicians, experienced more significant negative effects on their wages due to import competition than workers in administrative positions, challenging the conventional wisdom that higher skill levels alone provide a reliable shield against the economic shocks of globalization.
The findings suggest that the risks of global trade are distributed more unevenly across the workforce than previously understood, moving beyond a simple high-skill versus low-skill divide. Led by a team of economists from the University of Barcelona, the University of Strasbourg, and the Bank of France, the analysis of more than 163,000 private-sector employees from 1993 to 2015 indicates that the very specificity of a worker’s skills can become a liability when their industry faces a surge in foreign competition. This shifts the focus from broad industrial sectors to the unique risk profile of individual occupations, prompting a re-evaluation of which workers are most in need of support and what policy measures can best address the wage stagnation and inequality driven by an integrated global economy.
A Deeper Analysis of Job-Specific Risks
To better understand the nuanced effects of global trade, the researchers developed a new metric called an occupational exposure index. Unlike previous studies that often concentrated on the impact to entire industries, this approach allowed for a more granular assessment of the specific professions most affected by import pressures, particularly from China. By analyzing administrative data on the careers of thousands of French workers over 22 years, the team could distinguish between the fates of people in different job roles, even within the same company or sector. This methodology provided a clearer picture of who truly bears the costs of intensified international competition.
The investigation moved beyond treating “skill” as a monolithic category. Instead, it examined the specific tasks and specializations associated with each job title. This focus on occupations, rather than just educational attainment or industry, was critical to uncovering the hidden vulnerabilities of certain skilled workers. The data showed that the economic pressures were not felt uniformly, with some highly trained professionals suffering disproportionately while others in roles requiring less formal training remained relatively insulated.
The Vulnerability of Specialized Expertise
Engineers and Technicians Under Pressure
The study’s most striking result was the significant wage impact on technical and engineering roles. These professions, often considered pillars of a modern, advanced economy, were found to be more exposed to wage depression from trade shocks than many other jobs. The reason appears to be that their specialized skills are closely tied to the production processes of specific goods. When a country’s market is opened to a flood of cheaper, comparable imports, the domestic industries producing those goods come under intense pressure. Consequently, the demand for the specialized skills required to design, manufacture, and maintain those products also falls, placing direct downward pressure on the wages of those highly trained experts.
The Paradox of Collective Bargaining
Another surprising element identified by the research was the role of labor market institutions. The negative wage effects on skilled specialists were found to be most pronounced in fields heavily regulated by collective bargaining agreements. While such agreements are designed to protect workers and ensure fair compensation, they may inadvertently create rigidities that make it difficult for wages to adjust to sudden competitive shocks. In these environments, instead of a gradual reduction in pay, the pressure from import competition may manifest more starkly, potentially leading to job displacement or more significant wage stagnation for those whose skills are suddenly devalued by global market shifts. This finding highlights the complex interplay between trade policy and domestic labor market structures.
Contextualizing a Long-Standing Debate
Trade Competition vs. Technological Change
The results of the French study contribute a vital new perspective to the enduring economic debate over the primary drivers of wage inequality in developed nations. For decades, economists have weighed two main explanations: skill-biased technological progress and international trade. The technology argument posits that advancements in automation and digital tools have increased the demand for highly skilled workers who can use this technology, while simultaneously making the tasks of less-skilled workers obsolete. The trade argument, rooted in classical economic theories like the Stolper-Samuelson theorem, contends that opening trade with countries abundant in low-cost labor will inevitably drive down the wages of less-skilled workers in high-wage countries.
This new research complicates that binary choice. It demonstrates that trade, specifically import competition, does not just affect the low-skilled sector. By showing that highly specialized workers can also be vulnerable, the study suggests that the mechanisms of globalization are more complex. It is not merely about a country’s overall abundance of skilled or unskilled labor but about the specific tasks and occupations that are put into direct competition with foreign markets. Offshoring and the relocation of production processes to countries with lower labor costs are a key part of this phenomenon, hollowing out specific types of jobs in developed economies and worsening the wage gap.
Challenging the ‘Winners and Losers’ Narrative
While the focus on specialized skills provides a new lens, other research confirms that the overall landscape of risk remains complex. Broader studies across Europe suggest that an individual’s skill level is still a powerful predictor of their employment security, regardless of whether their sector is exposed to international trade. One analysis found that lower-skilled individuals faced a significantly higher risk of unemployment than their highly skilled peers, and this pattern held true even in sectors completely sheltered from foreign competition. This indicates that while globalization is a powerful force, it interacts with other structural factors within labor markets.
Furthermore, the nature of employment itself is changing in ways not solely attributable to trade. The rise of atypical or non-standard work contracts, for instance, is a widespread feature of modern economies. Interestingly, some research has found that such contracts are slightly more prevalent in sectors that are sheltered from globalization. This suggests that labor market precarity is a multifaceted issue driven by a combination of forces, including domestic deregulation, technological shifts, and changes in corporate strategy, in addition to the pressures of global trade.
Policy Implications for a Globalized World
The central takeaway from this emerging body of research is that coarse, one-size-fits-all policies are inadequate for addressing the challenges of globalization. The clear evidence that even highly skilled workers can be vulnerable demonstrates that simply promoting higher education and advanced training is not a panacea. Instead, policymakers must develop a more sophisticated understanding of which specific occupations are at risk and design tailored support systems. This could include targeted retraining programs that help workers with specialized but devalued skills transition to new roles, as well as strengthening social safety nets to cushion the impact of trade-related wage shocks.
Ultimately, the simple dichotomy of “globalization winners” and “globalization losers” is becoming obsolete. The reality is a far more intricate mosaic of varying risks and opportunities, where a worker’s vulnerability is determined by a combination of their skill level, the specificity of their occupation, the industry they work in, and the labor market institutions of their country. Crafting a more equitable and sustainable future requires policies that acknowledge this complexity and address the precise pressure points where global competition creates economic insecurity.