The Effectiveness of R&D Tax Credits: Cross-Industry Evidence

Russell Thomson (russellthomson@swin.edu.au)

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper presents new estimates of the efficacy of R&D tax incentives using cross-countrycross-industry data and a novel measure of tax policy that incorporates differences in the average capital–labour ratio in R&D investment across industries and variation in the tax treatment of different expenditure types across countries and over time. The results suggest that, in the short run, industry increases R&D investment by 0.24 dollars for every dollar of tax revenue forgone. The results appear to be more robust than estimates based on crosscountry or firm-level data.

Keywords: Innovation policy; R&D tax credits; determinants of R&D investment (search for similar items in EconPapers)
JEL-codes: E22 O31 O57 (search for similar items in EconPapers)
Pages: 11pp
Date: 2013-05
New Economics Papers: this item is included in nep-acc, nep-ino, nep-mac, nep-pbe and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2013n18

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