In the wake of the recent financial and economic crisis, the topic of income inequality has again become prominent in the national political debate in many countries. The Occupy Wall Street movement and the presidential campaign of United States senator Bernie Sanders are two recent examples of this. Concurrently, there has been a lively debate on globalization and automation, and to what extent these are contributing to the relative decline in the importance of the manufacturing sector in the Western world. For example, only a tenth of the U.S. workforce is employed in manufacturing, down from a third in the 1970s. Building a campaign on promises of revitalizing the manufacturing sector, chiefly through tariffs on Chinese and Mexican imports, Donald Trump became the first Republican candidate in decades to win the “Rust Belt” states of Michigan, Pennsylvania and Wisconsin. These states are characterized by decades of decline in the manufacturing sector. Similarly, in Europe, right- and left-wing populist parties have gained momentum in virtually every nation, drawing considerable support from the working class in these countries. The literature tends to focus on two mechanisms behind the decline in Western manufacturing employment: trade and technology. The logic behind the first argument is that globalization, through free-trade agreements and removal of trade barriers, has created incentives for firms to shift production from highwage countries to low-wage countries. The second hypothesis is essentially that skill-biased technological change, for instance through automation, leads to a higher relative demand for college-educated workers, and a decreased relative demand for low-skilled workers doing manual labor. This would, thus, increase the wage differential between these two groups of workers. Regardless of the underlying causes, the decline of the manufacturing sector in advanced economies is not merely a concern for displaced workers and their relatives. For instance, in Europe, some two-thirds of R&D spending is done in manufacturing (Rodrik 2016), highlighting the importance of this sector for the entire economy. Figure 1 shows the relationship between income inequality and the manufacturing share of nonfarm employment in the United States between 1970 and 2014. The nonfarm employment graph is the same as in Autor et al. (2016). This figure clearly shows that the manufacturing employment share has been in steady decline over the entire sample period, with an acceleration after the turn of the millennium, and a tendency to flatten out beginning around 2010. Income inequality has in creased considerably during this period. Similar conclusions can be reached for most Western countries. However, research has slightly neglected that during the early 21st century, income inequality has decreased in several newly industrialized countries, for instance in Turkey and in most Latin American countries (Pamuk 2008; Lustig et al. 2013). For example, the Gini coefficient of income inequality decreased by 13 % in Brazil and by 14% in Turkey between 2000 and 2014, while industry’s share of employment increased in both countries during the same time period (ILO 2014; Solt 2016). This is a sharp contrast to the 1980s and 1990s, when income inequality increased virtually everywhere.