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Dipping in the policy mix: Do R&D subsidies foster behavioral additionality effects of R&D tax credits?

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  • Daniel Neicu
  • Peter Teirlinck
  • Stijn Kelchtermans

Abstract

We analyze how behavioral additionality effects of wage-based R&D tax credits are influenced by the firm's joint use of R&D subsidies. Using matching estimators and a multivariate probit analysis of cross-sectional survey data on Belgian firms, we find that R&D subsidies induce tax credit users to focus more strongly on research relative to development and to accelerate the execution of R&D projects. To a slightly lesser extent, we also find size effects, firms scaling up current R&D or initiating additional projects. Overall, these findings suggest that companies that benefit from the ‘policy mix’ respond more strongly to R&D tax credits and use the tax-exempted resources to adopt a more strategic approach to R&D.

Suggested Citation

  • Daniel Neicu & Peter Teirlinck & Stijn Kelchtermans, 2016. "Dipping in the policy mix: Do R&D subsidies foster behavioral additionality effects of R&D tax credits?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(3), pages 218-239, April.
    • Handle: RePEc:taf:ecinnt:v:25:y:2016:i:3:p:218-239
    DOI: 10.1080/10438599.2015.1076192
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