Welcome to Thoughts on the Market.

I'm Chitanya, Chief Asia Economist for Morgan Stanley.

Along with my colleagues, bringing you a variety of perspectives I'll be talking about the

new paradigm shift for labor markets and the effect on the global economy.

It's Thursday, July 1st at 8pm in Hong Kong.

I recently relocated to Hong Kong after a three-year stint in New York.

At my last group dinner, I was asked to identify the most significant development in global

macro I had witnessed during my time in New York.

Many people would have likely pointed to the pandemic and the changes it's brought

about to how we work and live.

But in my view, perhaps a bigger change is a paradigm shift in how corporate profits

and wages will be distributed within national income.

For context, the share of profit profits in GDP has been on a rising path for the past

40 years, while the wage share has been declining until recently.

And at the same time, income inequality has increased sharply and inter-generation mobility

has declined.

While these trends are globally in nature, the US has undoubtedly been at the forefront.

As time wore on, these trends became increasingly unsustainable, calls for actions grew louder,

and a collective voice began to make its way into policy-making circles.

When the burden of COVID-19 recession fell most heavily on lower-income households, policymakers

were galvanized into action.

So how are policymakers addressing these issues and what are the implications?

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