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The additionality of R&D tax policy: Quasi-experimental evidence

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  • Holt, Jared
  • Skali, Ahmed
  • Thomson, Russell

Abstract

Despite the prevalence of R&D tax incentives, the amount of additional investment induced by each dollar of tax revenue forgone remains contested. It is notoriously difficult to identify the impact of R&D tax incentives because all firms are potentially eligible and because benefit and investment are jointly determined. Using comprehensive, firm-level data, we apply difference-in-difference analysis around a significant policy reform in Australia in 2012. We find that firms invest an additional $1.90 for every dollar of tax revenue forgone.

Suggested Citation

  • Holt, Jared & Skali, Ahmed & Thomson, Russell, 2021. "The additionality of R&D tax policy: Quasi-experimental evidence," Technovation, Elsevier, vol. 107(C).
    • Handle: RePEc:eee:techno:v:107:y:2021:i:c:s0166497221000742
    DOI: 10.1016/j.technovation.2021.102293
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    References listed on IDEAS

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    Cited by:

    1. Tang, Jinghua & Liu, Qigui, 2024. "R&D tax incentive policy, intellectual property right protection, and corporate innovation in an emerging market," Research in International Business and Finance, Elsevier, vol. 69(C).
    2. Carmen Elena Stoenoiu, 2022. "Sustainable Development—A Path to a Better Future," Sustainability, MDPI, vol. 14(15), pages 1-13, July.
    3. Sarpong, David & Boakye, Derrick & Ofosu, George & Botchie, David, 2023. "The three pointers of research and development (R&D) for growth-boosting sustainable innovation system," Technovation, Elsevier, vol. 122(C).

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    More about this item

    Keywords

    R&D tax policy; Firm-level; Innovation; Difference-in-Differences;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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