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More R&D with tax incentives? A meta-analysis

Listed author(s):
  • Elina Ladinska

    ()

  • Marielle Non

    ()

  • Bas Straathof

    ()

R&D tax incentives are widely used to stimulate private R&D. We review their effectiveness using meta regression analysis. The literature mainly consists of two families of micro-econometric studies. Read the accompanying press release . The first family (16 studies with 82 estimates by the end of 2014) estimates the elasticity between the user cost of R&D capital and private R&D expenditure (stock or flow). Correlations between R&D expenditure and the presence of an R&D tax incentive scheme are provided by the second family (9 studies with 95 estimates). For both types of studies we find strong evidence of publication bias. After correcting for this, we find that a reduction in the user cost of capital of ten percent raises stock of R&D capital by 1.3 percent and flow of R&D expenditure by 2.1 percent. For the second family we find that presence of a scheme is associated with seven percent more R&D expenditure.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 309.

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Date of creation: Jun 2015
Handle: RePEc:cpb:discus:309
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  1. Rufin Baghana & Pierre Mohnen, 2009. "Effectiveness of R&D tax incentives in small and large enterprises in Québec," Small Business Economics, Springer, vol. 33(1), pages 91-107, June.
  2. Daniel J. Wilson, 2009. "Beggar Thy Neighbor? The In-State, Out-of-State, and Aggregate Effects of R&D Tax Credits," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 431-436, May.
  3. Michel Dumont, 2013. "The impact of subsidies and fiscal incentives on corporate R&D expenditures in Belgium (2001-2009)," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(1), pages 69-91.
  4. Dagenais, M. & Mohnen, P. & Therrien, P., 1997. "Do Canadian Firms Respond to Fiscal Incentives To Research and Development?," G.R.E.Q.A.M. 97b05, Universite Aix-Marseille III.
  5. Loriane Py & Antoine Bozio & Delphine Irac, 2014. "Impact of research tax credit on R&D and innovation: evidence from the 2008 French reform," EcoMod2014 6873, EcoMod.
  6. Chirinko, Robert S. & Fazzari, Steven M. & Meyer, Andrew P., 1999. "How responsive is business capital formation to its user cost?: An exploration with micro data," Journal of Public Economics, Elsevier, vol. 74(1), pages 53-80, October.
  7. Castellacci, Fulvio & Lie, Christine Mee, 2015. "Do the effects of R&D tax credits vary across industries? A meta-regression analysis," Research Policy, Elsevier, vol. 44(4), pages 819-832.
  8. T. D. Stanley, 2008. "Meta-Regression Methods for Detecting and Estimating Empirical Effects in the Presence of Publication Selection," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(1), pages 103-127, 02.
  9. Benoît Mulkay & Jacques Mairesse, 2013. "The R&D tax credit in France: assessment and ex ante evaluation of the 2008 reform," Oxford Economic Papers, Oxford University Press, vol. 65(3), pages 746-766, July.
  10. 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.
  11. 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.
  12. T. D. Stanley, 2005. "Beyond Publication Bias," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 309-345, 07.
  13. Ajay Agrawal & Carlos Rosell & Timothy S. Simcoe, 2014. "Do Tax Credits Affect R&D Expenditures by Small Firms? Evidence from Canada," NBER Working Papers 20615, National Bureau of Economic Research, Inc.
  14. Jon Nelson & Peter Kennedy, 2009. "The Use (and Abuse) of Meta-Analysis in Environmental and Natural Resource Economics: An Assessment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(3), pages 345-377, March.
  15. 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.
  16. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  17. Yang, Chih-Hai & Huang, Chia-Hui & Hou, Tony Chieh-Tse, 2012. "Tax incentives and R&D activity: Firm-level evidence from Taiwan," Research Policy, Elsevier, vol. 41(9), pages 1578-1588.
  18. 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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