This work focuses on the determinants of the declining labor share in Spain between 1995 and 2021. We focus on Spain for various reasons; first, because of an apparent lack of literature about the Spanish case, and second, because of its singular historical context and political economy that make it an interesting case study. We use a theoretical framework developed by Hein (2015) based on the Kaleckian model of growth and distribution. This framework allows us to analyze the effects of neoliberalism and financialization on income distribution. We also assess the effects of standard determinants of the labor share, such as trade globalization, financial globalization, and technological change. All our variables are integrated of order one, and given the limited size of our sample, we use an ARDL bound testing model, allowing us to distinguish between short- and long-term effects. The results confirm that the financialization process has a negative impact on the Spanish labor share, particularly through the weakening of workers’ bargaining power, the declining government activity, and the increasing financial activity. We do find that the standard variables advanced in the literature are also important determinants to consider.