Effectiveness of fiscal incentives for R&D: quasi-experimental evidence

Irem Guceri () and Li Liu
Additional contact information
Irem Guceri: Oxford University Centre for Business Taxation

No 1512, Working Papers from Oxford University Centre for Business Taxation

Abstract: With growing academic and policy interest in R&D tax incentives, the question about their effectiveness has become ever more relevant. In the absence of an exogenous policy reform, the simultaneous determination of companies' tax positions and their R&D spending causes an identification problem in evaluating tax incentives. To overcome this problem, we exploit a UK policy reform and use the population of corporation tax records that provide precise information on the amount of firm-level R&D expenditure. Using difference-in-differences and other panel regression approaches, we find a positive and significant impact of tax incentives on R&D spending, and an implied user cost elasticity estimate of around -2.3. This translates to more than a pound in additional private R&D for each pound foregone in corporation tax revenue.

Keywords: Tax incentives; corporation tax returns; quasi-experiment (search for similar items in EconPapers)
JEL-codes: H2 O3 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-acc, nep-ino, nep-pbe and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sbs.ox.ac.uk/sites/default/files/Busine ... Series_15/WP1512.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_15/WP1512.pdf [301 Moved Permanently]--> https://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_15/WP1512.pdf)

Related works:
Journal Article: Effectiveness of Fiscal Incentives for R&D: Quasi-experimental Evidence (2019)
Working Paper: Effectiveness of Fiscal Incentives for R&D: Quasi-Experimental Evidence (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:btx:wpaper:1512

Access Statistics for this paper

More papers in Working Papers from Oxford University Centre for Business Taxation Contact information at EDIRC.
Bibliographic data for series maintained by Dongxian Guo ( this e-mail address is bad, please contact ).