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Impact of research tax credit on R&D and innovation: evidence from the 2008 French reform

Author

Listed:
  • A. Bozio
  • D. Irac
  • L. Py

Abstract

This paper presents an ex post evaluation of the 2008 reform of the French research tax credit. The tax scheme was massively overhauled, with a switch to a pure volume-based design, leading to a large increase in the number of firms applying and an important increase in the cost of the scheme. Given the timing and the characteristics of the reform, measuring its causal impact is challenging. We have relied on four unique sources of data – R&D surveys, administrative tax data, firm characteristics and patent datasets – to assess how French firms have reacted to these changes in incentives. Our empirical strategies rest on combining difference in differences with matching methods and taking advantage of the particular way the 2008 reform has affected incentives to invest in R&D. Our results suggest a positive effect of the 2008 reform on R&D at both the intensive margin and extensive margin, but a possible lower impact on innovation than could have been expected.

Suggested Citation

  • A. Bozio & D. Irac & L. Py, 2014. "Impact of research tax credit on R&D and innovation: evidence from the 2008 French reform," Working papers 532, Banque de France.
  • Handle: RePEc:bfr:banfra:532
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    References listed on IDEAS

    as
    1. Boris Lokshin & Pierre Mohnen, 2012. "How effective are level-based R&D tax credits? Evidence from the Netherlands," Applied Economics, Taylor & Francis Journals, vol. 44(12), pages 1527-1538, April.
    2. Emmanuel Duguet, 2012. "The effect of the incremental R&D tax credit on the private funding of R&D an econometric evaluation on french firm level data," Revue d'économie politique, Dalloz, vol. 122(3), pages 405-435.
    3. repec:spr:portec:v:1:y:2002:i:2:d:10.1007_s10258-002-0010-3 is not listed on IDEAS
    4. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    5. Czarnitzki, Dirk & Hanel, Petr & Rosa, Julio Miguel, 2011. "Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms," Research Policy, Elsevier, vol. 40(2), pages 217-229, March.
    6. Cappelen, Ådne & Raknerud, Arvid & Rybalka, Marina, 2012. "The effects of R&D tax credits on patenting and innovations," Research Policy, Elsevier, vol. 41(2), pages 334-345.
    7. Ientile, Damien & Mairesse, Jacques, 2009. "A policy to boost R&D: Does the R&D tax credit work?," EIB Papers 6/2009, European Investment Bank, Economics Department.
    8. Raffo, Julio & Lhuillery, Stéphane, 2009. "How to play the "Names Game": Patent retrieval comparing different heuristics," Research Policy, Elsevier, vol. 38(10), pages 1617-1627, December.
    9. 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.
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Les crédits d’impôt stimulent-ils la recherche-développement ?
      by ? in D'un champ l'autre on 2015-01-19 18:36:00

    Citations

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    Cited by:

    1. Elina Ladinska & Marielle Non & Bas Straathof, 2015. "More R&D with tax incentives? A meta-analysis," CPB Discussion Paper 309, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Benjamin Montmartin & Marcos Herrera & Nadine Massard, 2015. "R&D Policies in France: New Evidence from a NUTS3 Spatial Analysis," GREDEG Working Papers 2015-26, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    3. Margolis, David N. & Miotti, Luis, 2017. "Why Do French Engineers Find Stable Jobs Faster than PhDs?," IZA Discussion Papers 11197, Institute of Labor Economics (IZA).
    4. Konstantins Benkovskis & Olegs Tkacevs & Naomitsu Yashiro, 2018. "Importance of EU Regional Support Programmes for Firm Performance," Working Papers 2018/01, Latvijas Banka.
    5. Benjamin Montmartin & Marcos Herrera & Nadine Massard, 2017. "R&D Policy regimes in France: New Evidence from a spatio-temporal Analysis," GREDEG Working Papers 2017-22, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    6. repec:nse:ecosta:ecostat_2017_493_3 is not listed on IDEAS
    7. repec:nse:ecosta:ecostat_2017_493_1 is not listed on IDEAS
    8. Pfeiffer, Olena & Spengel, Christoph, 2017. "Tax incentives for research and development and their use in tax planning," ZEW Discussion Papers 17-046, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Keywords

    tax credit; evaluation; R&D; innovation.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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