Stock Market Booms and Labor Bargaining Power

Abstract This essay argues that there is a connection among modern stock market booms, the rising income inequality trend of the last four decades, and labor bargaining power. The essay also contends that the institutional and policy backdrop in any given economic era impacts the ability of economic actors and groups to influence their relative income standing, and therefore the political-economic structure matters. The basic argument is that there is an interplay between changes in wages relative to profits with stock valuations, that is, there exists a bidirectionality between income distribution and stock price booms. The paper offers an explanation for the major stock price run-ups in the 21st century.