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Technological progress and the global decline in the manufacturing labour share

Author

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  • Madsen, Jakob B.
  • Mayandy, Kesavarajah K.

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.

Suggested Citation

  • Madsen, Jakob B. & Mayandy, Kesavarajah K., 2026. "Technological progress and the global decline in the manufacturing labour share," Journal of Comparative Economics, Elsevier, vol. 54(2), pages 511-525.
    • Handle: RePEc:eee:jcecon:v:54:y:2026:i:2:p:511-525
    DOI: 10.1016/j.jce.2026.01.010
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    Keywords

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    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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