Effectiveness of Fiscal Incentives for R&D: Quasi-experimental Evidence

Irem Guceri and Li Liu

American Economic Journal: Economic Policy, 2019, vol. 11, issue 1, 266-91

Abstract: We exploit a 2008 UK policy reform that increased the tax incentives for R&D in medium-sized enterprises relative to large ones, to overcome the endogeneity of exposure to such tax credits. We estimate a difference-in-difference design on the universe of corporation tax filings in the United Kingdom, combined with other datasets. We find a positive and significant impact of tax credits for R&D, implying a user-cost elasticity estimate of around −1.6. This magnitude implies around $1 in additional private R&D spending per dollar foregone in tax revenue.

JEL-codes: H25 H32 K34 L25 O32 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pol.20170403
References: Add references at CitEc
Citations: View citations in EconPapers (39)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pol.20170403 (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... Jat3QpkI1yb04RvR3Mnj (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... 6vFRRL0SMUP8NNwtpO5w (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... PUoL_ZGY-f-nDDiz7KoF (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Effectiveness of Fiscal Incentives for R&D: Quasi-Experimental Evidence (2017)
Working Paper: Effectiveness of fiscal incentives for R&D: quasi-experimental evidence (2015)
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:aea:aejpol:v:11:y:2019:i:1:p:266-91

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().