òòò½Íø Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Effectiveness of Fiscal Incentives for R&D: Quasi-experimental Evidence
òòò½Íø Journal: Economic Policy
vol. 11,
no. 1, February 2019
(pp. 266–91)
Abstract
We exploit a 2008 UK policy reform that increased the tax incentives for R&D in medium-sized enterprises relative to large ones, to overcome the endogeneity of exposure to such tax credits. We estimate a difference-in-difference design on the universe of corporation tax filings in the United Kingdom, combined with other datasets. We find a positive and significant impact of tax credits for R&D, implying a user-cost elasticity estimate of around −1.6. This magnitude implies around $1 in additional private R&D spending per dollar foregone in tax revenue.Citation
Guceri, Irem, and Li Liu. 2019. "Effectiveness of Fiscal Incentives for R&D: Quasi-experimental Evidence." òòò½Íø Journal: Economic Policy 11 (1): 266–91. DOI: 10.1257/pol.20170403Additional Materials
JEL Classification
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- H32 Fiscal Policies and Behavior of Economic Agents: Firm
- K34 Tax Law
- L25 Firm Performance: Size, Diversification, and Scope
- O32 Management of Technological Innovation and R&D