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

Dirk Czarnitzki, Petr Hanel () and Julio Miguel Rosa

No 04-77, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

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)
Date: 2004
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Citations: View citations in EconPapers (23)

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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 (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:2882

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