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State R&D Tax Credits and High-Technology Establishments

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  • Yonghong Wu

    (University of Illinois at Chicago)

Abstract

This empirical research examines the effects of state research and development (R&D) tax credits on the size of the high-technology business sector. In addition to a description of federal and state R&D tax credit programs, this article estimates a model that relates each of the two alternate measures of high-technology establishments in each state to state R&D tax credit, controlling for other factors. The results show that the initiation of a state R&D tax credit has significant and positive effects on the number of the state's high-technology establishments relative to its population or total business establishments. This research provides empirical evidence about the role of state R&D tax incentives in technology-based economic development.

Suggested Citation

  • Yonghong Wu, 2008. "State R&D Tax Credits and High-Technology Establishments," Economic Development Quarterly, , vol. 22(2), pages 136-148, May.
    • Handle: RePEc:sae:ecdequ:v:22:y:2008:i:2:p:136-148
    DOI: 10.1177/0891242408316728
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    References listed on IDEAS

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    1. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    2. Van Reenen, John & Griffith, Rachel & Bloom, Nicholas, 2000. "Do R&D Credits Work? Evidence From A Panel Of Countries 1979-97," CEPR Discussion Papers 2415, C.E.P.R. Discussion Papers.
    3. Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003. "The impact of public R&D expenditure on business R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 225-243.
    4. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    5. Daniel J. Wilson, 2005. "Beggar thy neighbor? the in-state vs. out-of-state impact of state R&D tax credits," Working Paper Series 2005-08, Federal Reserve Bank of San Francisco.
    6. Hall, Bronwyn & Van Reenen, John, 2000. "How effective are fiscal incentives for R&D? A review of the evidence," Research Policy, Elsevier, vol. 29(4-5), pages 449-469, April.
    7. Yonghong Wu, 2005. "The effects of state R&D tax credits in stimulating private R&D expenditure: A cross-state empirical analysis," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(4), pages 785-802.
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    Cited by:

    1. Wasiluk Dorota & Białek-Jaworska Anna, 2020. "Determinants of corporate R&D expenditures: the role of taxes," Central European Economic Journal, Sciendo, vol. 7(54), pages 110-126, January.
    2. Robert S. Chirinko & Daniel J. Wilson, 2022. "Fiscal Policies for Job Creation and Innovation: The Experiences of US States," CESifo Working Paper Series 10158, CESifo.
    3. James C. Hearn & T. Austin Lacy & Jarrett B. Warshaw, 2014. "State Research and Development Tax Credits," Economic Development Quarterly, , vol. 28(2), pages 166-181, May.
    4. Catherine Fazio & Jorge Guzman & Scott Stern, 2020. "The Impact of State-Level Research and Development Tax Credits on the Quantity and Quality of Entrepreneurship," Economic Development Quarterly, , vol. 34(2), pages 188-208, May.
    5. Catherine Fazio & Jorge Guzman & Scott Stern, 2019. "The Impact of State-Level R&D Tax Credits on the Quantity and Quality of Entrepreneurship," NBER Working Papers 26099, National Bureau of Economic Research, Inc.
    6. Tania Babina & Sabrina T. Howell, 2018. "Entrepreneurial Spillovers from Corporate R&D," NBER Working Papers 25360, National Bureau of Economic Research, Inc.
    7. Peress, Joël & Goldman, Jim, 2017. "Firm R&D and Financial Analysis: How Do They Interact?," CEPR Discussion Papers 12433, C.E.P.R. Discussion Papers.
    8. Button, Patrick, 2019. "Do tax incentives affect business location and economic development? Evidence from state film incentives," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 315-339.
    9. Goldman, Jim & Peress, Joel, 2023. "Firm R&D and financial analysis: How do they interact?," Journal of Financial Intermediation, Elsevier, vol. 53(C).
    10. Yang, Chih-Hai & Huang, Chia-Hui & Hou, Tony Chieh-Tse, 2012. "Tax incentives and R&D activity: Firm-level evidence from Taiwan," Research Policy, Elsevier, vol. 41(9), pages 1578-1588.

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