Evaluating the Impact of R&D Tax Credits on Innovation: A Microeconometric Study on Canadian Firms

Petr Hanel (), Dirk Czarnitzki and Julio Miguel Rosa ()
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Julio Miguel Rosa: Statistics Canada

Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université de Sherbrooke

Abstract: This study examines the effect of R&D tax credits on innovation activities of Canadian manufacturing firms. Over the 1997-1999 period the Federal and Provincial R&D tax credit programs were used by more than one third of all manufacturing firms and by close to two thirds of firms in high-technology sectors. We investigate the average effect of R&D tax credits on a series of innovation indicators such as number of new products, sales with new products, originality of innovation etc. using a non-parametric matching approach. Compared to a hypothetical situation in the absence of R&D tax credits, recipients of tax credits show significantly better scores on most but not all performance indicators. We therefore conclude that tax credits increase the R&D engagement at the firm level and that the R&D activities induced by fiscal incentives lead to additional innovation output.

Keywords: R&D; Innovation; Public Subsidies; Tax Credit; Policy Evaluation. (search for similar items in EconPapers)
JEL-codes: C14 C25 H50 O38 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2005
New Economics Papers: this item is included in nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-0501.pdf First version, 2005 (application/pdf)

Related works:
Journal Article: Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms (2011)
Working Paper: Evaluating the Impact of R&D Tax Credits on Innovation: A Microeconometric Study on Canadian Firms (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:shr:wpaper:05-01

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