How effective are R&D tax incentives? Reconciling micro and macro evidence

Silvia Appelt, Matěj Bajgar, Chiara Criscuolo and Fernando Galindo-Rueda

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Recent firm-level studies find R&D tax incentives to be much more effective at stimulating firms' R&D investment than what aggregate analyses indicate. Based on a distributed analysis of official R&D survey and administrative tax relief micro-data for 19 OECD countries, we show that two factors can reconcile these contrasting results. Firstly, a limited uptake of R&D tax incentives in most countries makes aggregate studies underestimate the effectiveness of R&D tax incentives. Secondly, R&D tax incentives are (much) less effective for large and R&D-intensive firms, which account for a small share of R&D-performing firms but most aggregate R&D tax relief, making firm-level studies overstate the aggregate effectiveness of R&D tax incentives.

Keywords: mental health; employment; earnings; policy evaluation; psychological therapies (search for similar items in EconPapers)
Date: 2025-01-29
New Economics Papers: this item is included in nep-acc, nep-ino, nep-pbe, nep-pub, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp2071

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