This article examines how input relationship in fragmented production system shape functional income inequality. We argue that input specificity — reflecting the degree of specialization in intermediate good production — affects workers ’ bargaining power and, consequently, the labor share through skill premia and the disruptive potential of strikes. Using regional input-output data for European economies and a novel methodology for constructing sectoral production trees, we measure input specificity and analyze its impact on the functional income di tribution. Our results suggest significant regional and sectoral differences in input specificity and reveal a robust positive association between input specificity and labor share, offering new insights into regional economic inequality.