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

  • 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)

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.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2010n11.

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Length: 37 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:iae:iaewps:wp2010n11
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