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The Effects of Public Subsidies on R&D Employment: Evidence from OECD Countries

Author

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  • Russell Thomson

    (Melbourne Institute of Applied Economic and Social Research, and Intellectual Property Research Institute of Australia, The University of Melbourne)

  • Paul H. Jensen

    (Melbourne Institute of Applied Economic and Social Research, and Intellectual Property Research Institute of Australia, The University of Melbourne)

Abstract

Existing empirical evidence suggests that public subsidies and fiscal incentives have a positive effect on the amount of private R&D expenditure. However, most studies have failed to address the possibility at least some of this increase may simply reflect the fact that R&D workers are being paid higher wages. Such an omission may imply that past research has over-estimated the effectiveness of R&D tax concessions. In the absence of widely-available R&D deflators, we consider the impact of a range of public subsidies on the number of fulltime equivalent workers employed in R&D (i.e., researchers) in the business sector. Our findings strongly support the effectiveness of both direct subsidies and fiscal incentives.

Suggested Citation

  • Russell Thomson & Paul H. Jensen, 2010. "The Effects of Public Subsidies on R&D Employment: Evidence from OECD Countries," Melbourne Institute Working Paper Series wp2010n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2010n11
    as

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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2010n11.pdf
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    References listed on IDEAS

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    1. World Bank, 2007. "World Development Indicators 2007," World Bank Publications - Books, The World Bank Group, number 8150, December.
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    Cited by:

    1. Gutierrez, Juan Julio & Correa, Paulo, 2012. "Commercialization of publicly funded research and development (R&D) in Russia : scaling up the emergence of spinoff companies," Policy Research Working Paper Series 6263, The World Bank.
    2. Sergio Afcha & Jose García-Quevedo, 2016. "The impact of R&D subsidies on R&D employment composition," Industrial and Corporate Change, Oxford University Press, vol. 25(6), pages 955-975.
    3. Catalina Martínez & Laura Cruz-Castro & Luis Sanz-Menéndez, 2016. "Innovation capabilities in the private sector: evaluating subsidies for hiring S&T workers in Spain," Research Evaluation, Oxford University Press, vol. 25(2), pages 196-208.
    4. Michel Dumont & André Spithoven & Peter Teirlinck, 2016. "Public Support for R&D and the Educational Mix of R&D Employees," CESifo Economic Studies, CESifo, vol. 62(3), pages 426-452.
    5. Correa, Paulo & Andres, Luis & Borja-Vega, Christian, 2013. "The impact of government support on firm R&D investments : a meta-analysis," Policy Research Working Paper Series 6532, The World Bank.
    6. André Spithoven, Belgian Science Policy Office and Ghent University & Michel Dumont & Peter Teirlinck, Belgian Science Policy Office and KU Leuven, 2014. "Working Paper 08-14 - Public support for R&D and the educational mix of R&D employees," Working Papers 1408, Federal Planning Bureau, Belgium.
    7. Sergio Afcha & Jose García-Quevedo, 2016. "The impact of R&D subsidies on R&D employment composition," Industrial and Corporate Change, Oxford University Press, vol. 25(6), pages 955-975.
    8. Russell Thomson, 2013. "Measures of R&D Tax Incentives for OECD Countries," Review of Economics and Institutions, Università di Perugia, vol. 4(3).

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    More about this item

    Keywords

    innovation policy; R&D tax credits; R&D investment;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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