Evaluating the Effects of an R&D Policy Mix of Subsidies and Tax Credits

Daniel Neicu ()
Additional contact information
Daniel Neicu: European Commission, Brussels, Belgium, and the Department of Strategy, Innovation & Entrepreneurship, University of Leuven, Belgium

Management and Economics Review, 2019, vol. 4, issue 2, 1-13

Abstract: This paper studies the additionality of a policy mix of R&D subsidies and wage-based tax credits on firms' spending on basic research, applied research, and on development activities. Using non-parametric matching and instrumental variables estimations on a rich dataset of R&D-active companies, the results show that tax credits and subsidies have substantially different effects on firms' R&D budgets. First, while tax credits alone increase private R&D spending, subsidies only do so when they are used together with tax credits. Second, tax credits seem to outperform subsidies, showing positive effects on all types of R&D. Subsidies only increase research spending when mixed with tax credits, and have no effect on development spending. These results have interesting implications for R&D policy design and R&D management.

Keywords: R&D; additionality; tax credits; subsidies; policy mix. (search for similar items in EconPapers)
JEL-codes: D01 D03 D04 D78 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://mer.ase.ro/files/2019_2/4-9.pdf (application/pdf)

Related works:
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:rom:merase:v:4:y:2019:i:2:p:192-216

Access Statistics for this article

Management and Economics Review is currently edited by Ciocoiu Nadia Carmen

More articles in Management and Economics Review from Faculty of Management, Academy of Economic Studies, Bucharest, Romania Contact information at EDIRC.
Bibliographic data for series maintained by Ciocoiu Nadia Carmen ().