The process of development in emerging economies like Brazil, India, China and South Africa (BICS) has an important bearing on the structure of the world economy. With the high potential for growth and presence of large labor force, these economies have affected both the labor and goods market of the world. However, despite many structural changes, these economies have also witnessed the trend of decreasing labor share from the 1980s onwards. The continuing decline is a matter of concern for these economies, considering the local employment structure. The present study investigates whether the adoption of more market supportive institutions (defined in terms of economic freedom) is an important factor responsible for the decline in labor income share. The study uses one- and two-way panel fixed effect model on the data from 2000 to 2014 and the results show that increase in economic freedom leads to a decline in the labor share. It suggests that the labor class does not reap the gains possible because of more economic freedom. For individual areas of economic freedom, the results reveal that the decline in the public sector or government share has a negative impact on the labor’s share. That means the protection enjoyed by labor regarding job protection and wage increase in the public sector has a positive influence on labor’s share in the total value-added. Further, the study finds that both openness and capital-output ratio have a negative impact on labor share. Among the control variables, only the level of democracy has a positive influence on labor share