Technological progress and the global decline in the manufacturing labour share

Jakob B. Madsen and Kesavarajah K. Mayandy

Journal of Comparative Economics, 2026, vol. 54, issue 2, 511-525

Abstract: Using manufacturing data for a panel of 86 low- , middle-, and high-income countries over the period 1963–2020, this study investigates the effects of domestic and foreign technological progress on the labour share dynamics in low- and high-tech manufacturing. We find that the increase in domestic and, in particular, foreign technological progress since approximately 1990, has reduced the labour share in high-income countries and contributed to an increase in the labour share in middle- and low-income countries. The positive effects in the low-income countries have been driven by high R&D-intensity firms. Overall, we find that estimates for the US and other high-income countries cannot be used to project the underlying drivers of labour shares in the middle- and low-income countries.

Keywords: Labour share; Technological progress; Foreign technology spillovers (search for similar items in EconPapers)
JEL-codes: E25 O14 O33 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:54:y:2026:i:2:p:511-525

DOI: 10.1016/j.jce.2026.01.010

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