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Will the real R&D employees please stand up? Effects of tax breaks on firm level outcomes

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  • Irem Guceri

    (Oxford University Centre for Business Taxation)

Abstract

This paper evaluates the effect of R&D tax incentives in a quasi-experimental setting. I identify the impact by exploiting a reform in UK policy which increased the SME threshold from 250 to 500 employees. First, I provide evidence that tax incentives help to increase R&D spending at the company level, and the effect translates to a user cost elasticity of -1.18. Second, R&D generated through the reform may be attributable to an increase in the number of R&D employees. I use R&D survey data for which the companies do not have an incentive to relabel their ordinary spending as R&D.

Suggested Citation

  • Irem Guceri, 2016. "Will the real R&D employees please stand up? Effects of tax breaks on firm level outcomes," Working Papers 1602, Oxford University Centre for Business Taxation.
  • Handle: RePEc:btx:wpaper:1602
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    R&D; tax credits; difference-in-differences;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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