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Labor share decline across US manufacturing sectors: 1979–2019

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  • Swayamsiddha Sarangi

Abstract

This paper studies the sectoral contributions to aggregate manufacturing labour share decline in the US between 1979 and 2019. Using the Log Mean Divisia index (LMDI) decomposition, the decline in the manufacturing sector’s labour share is decomposed into contributions from real wage growth, labour productivity growth, changes in employment shares, and relative prices arising from the constituent sectors across three business cycles. The primary findings of the paper suggest that the downward decoupling of real wages from labour productivity is the primary contributor to the labour share decline in manufacturing. Moreover, low labour share sectors (especially chemical products, food and beverage and tobacco products, and petroleum and coal products) have experienced an increase in their employment shares, contributing negatively to aggregate manufacturing labour share. This paper advances insights related to sectoral heterogeneity and possible mechanisms behind the decline in aggregate manufacturing labour share.

Suggested Citation

  • Swayamsiddha Sarangi, 2026. "Labor share decline across US manufacturing sectors: 1979–2019," International Review of Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 63-89, January.
    • Handle: RePEc:taf:irapec:v:40:y:2026:i:1:p:63-89
    DOI: 10.1080/02692171.2024.2404976
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