| Summary: | 碩士 === 國立中山大學 === 經濟學研究所 === 106 === In response to the global financial crisis of 2008, many countries have implemented a stimulus by reducing labor income and/or capital income taxes. To examine the effects of these two distinctive types of tax cuts, we build a DSGE model with labor market search and matching frictions. We show that both tax cuts raise the output, labor market tightness, and the labor force participation rate but lower the unemployment rate. However, they generate the opposite effects on the wage rate and labor income share. Moreover, we find that a higher elasticity of substitution between labor and capital can obtain a reverse consequence on the labor income share.
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