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Recent firm-level studies find R&D tax incentives to be much
more effective at stimulating firms’ R&D investment than aggregate
analyses suggest. Based on a distributed analysis of official
R&D survey and administrative tax relief microdata for 19 OECD
countries, we show that two factors can reconcile these contrasting
results. Firstly, the limited uptake of R&D tax incentives in most
countries makes aggregate studies underestimate the effectiveness
of R&D tax incentives. Secondly, R&D tax incentives are (much)
less effective for large and R&D-intensive firms, which account for
a small share of R&D-performing firms but most aggregate R&D
tax relief.
