The additionality of R&D tax policy: Quasi-experimental evidence

Jared Holt, Ahmed Skali and Russell Thomson

Technovation, 2021, vol. 107, issue C

Abstract: Despite the prevalence of R&D tax incentives, the amount of additional investment induced by each dollar of tax revenue forgone remains contested. It is notoriously difficult to identify the impact of R&D tax incentives because all firms are potentially eligible and because benefit and investment are jointly determined. Using comprehensive, firm-level data, we apply difference-in-difference analysis around a significant policy reform in Australia in 2012. We find that firms invest an additional $1.90 for every dollar of tax revenue forgone.

Keywords: R&D tax policy; Firm-level; Innovation; Difference-in-Differences (search for similar items in EconPapers)
JEL-codes: H25 O31 O38 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:techno:v:107:y:2021:i:c:s0166497221000742

DOI: 10.1016/j.technovation.2021.102293

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