Do the effects of R&D tax credits vary across industries?

This new paper by Castellacci and Lie presents a survey of the micro-econometric literature on the effects of R&D tax credits on firms’ innovation activities.

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The sectoral dimension

The paper focuses on one specific aspect that has not received sufficient attention in previous research: the sectoral dimension. The meta-regression analysis (MRA) sets up a new database collecting a large number of firm-level studies on the effects of R&D tax credits and investigates the factors that may explain differences in the estimated effects that are reported in the literature.

Sectors matter

The main result of the MRA analysis is indeed that sectors matter. Specifically, the additionality effect of R&D tax credits is on average stronger for SMEs, firms in the service sectors, and firms in low-tech sectors in countries with an incremental scheme.

The paper proposes a simple framework to investigate why the innovation and economic effects of R&D tax credits vary across sectors and points out new directions and hypotheses for future research.

 

 

Published Feb. 20, 2015 2:49 PM - Last modified Feb. 20, 2015 2:49 PM