Do tax incentives for research increase firm innovation? An RD Design for RD
Dechezleprêtre, Antoine; Einiö, Elias; Martin, Ralf; Nguyen, Kieu-Trang; Van Reenen, John (2016-04-13)
Dechezleprêtre, Antoine
Einiö, Elias
Martin, Ralf
Nguyen, Kieu-Trang
Van Reenen, John
Valtion taloudellinen tutkimuskeskus VATT
13.04.2016
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2018042618919
https://urn.fi/URN:NBN:fi-fe2018042618919
Tiivistelmä
We present the first evidence showing causal impact of research and development (R&D) tax incentives on innovation outcomes. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting, with no evidence of a decline in the quality of innovation. R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design, but firms do adjust assets to take advantage of the subsidy post-policy. We estimate that over 2006-11 business R&D would be around 10% lower in the absence of the tax relief scheme.
Tutkimusteema
Economic growth, Taloudellinen kasvu, Taxation, Verotus
JEL
H230 - Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies, H250 - Business Taxes and Subsidies including sales and value-added (VAT), H320 - Fiscal Policies and Behavior of Economic Agents: Firm, O310 - Innovation and Invention: Processes and Incentives, O320 - Management of Technological Innovation and RD
Avainsanat
RD, patents, tax, innovation, Regression Discontinuity design
Kokoelmat
- VATT Working Papers [164]