Social scientists often refer to labor sectors as divisions of the economy. There are several ways to describe labor sectors, but all of them refer to systems of grouping similar labor or broad classifications of industries.

One common system of labor sector divisions distinguishes between the primary, secondary, and tertiary sectors. The primary sector refers to the segment of the economy working directly with raw materials from the natural environment. This sector includes industries such as agriculture, mining, and forestry. The secondary sector includes industries producing manufactured goods. Service activities such as banking, retail sales, transportation, and communication services are categorized in the tertiary sector. Social scientists sometimes, though not consistently, extend these divisions to specify a quaternary sector and a quinary sector. The quaternary sector refers to intellectual activities such as education, information technology, and scientific research. The quinary sector, a branch of the quaternary sector, is limited to the labor of high-level decision makers such as top executives in government and other industries.

The U.S. Bureau of Labor Statistics (BLS) uses a more detailed labor sector system to classify industries into sectors. The BLS lists three "goods producing" sectors and nine "service producing" sectors. The goods producing sectors include natural resources, construction, and manufacturing. The service producing sectors include trade, transportation, and utilities; information; financial activities; professional and business services; education and health services; leisure and hospitality; public administration; other services; and unclassified industries.

The BLS uses sectors to evaluate changes in the national economy, but they can also be used to understand economic structure in other countries. The distribution of labor sectors in a country has implications for the country's development potential. In traditional developing countries, as compared with industrialized countries, a larger proportion of the economy is involved in the primary sector. When investments flow to developing countries, workers leave the primary sector for higher-paying jobs in cities. However, social scientists have noticed that labor sectors in countries developing in the modern economy do not transition in the same pattern as countries that industrialized earlier. Many researchers claim foreign investments influence developing countries' labor sectors and maintain international inequalities.

Rather than focusing on industries in labor sectors, some social scientists define labor sectors descriptively. For example, "nonprofit sector" refers to not-for-profit organizations, and "public sector" refers to organizations for the public good (such as local government). Labor sectors can also be defined by the regulatory status of labor. In this context, the formal labor sector includes all activities reported as labor to the government. The informal sector refers to voluntary labor, unpaid labor, unreported labor, and possibly illegal labor. Often the informal sector refers to volunteers, self-employed workers, or small business employees, but this sector can also include exploitive situations for undocumented workers or other workers with few employment alternatives.

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