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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.

Suggested Citation

  • Russell Thomson & Paul H. Jensen, 2010. "The Effects of Public Subsidies on R&D Employment: Evidence from OECD Countries," Melbourne Institute Working Paper Series wp2010n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2010n11

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    Cited by:

    1. André Spithoven, Belgian Science Policy Office and Ghent University & Michel Dumont & Peter Teirlinck, Belgian Science Policy Office and KU Leuven, 2014. "Working Paper 08-14 - Public support for R&D and the educational mix of R&D employees," Working Papers 1408, Federal Planning Bureau, Belgium.
    2. repec:oup:indcch:v:25:y:2016:i:6:p:955-975. is not listed on IDEAS
    3. Catalina Martínez & Laura Cruz-Castro & Luis Sanz-Menéndez, 2016. "Innovation capabilities in the private sector: evaluating subsidies for hiring S&T workers in Spain," Research Evaluation, Oxford University Press, vol. 25(2), pages 196-208.
    4. Sergio Afcha & Jose García-Quevedo, 2016. "The impact of R&D subsidies on R&D employment composition," Industrial and Corporate Change, Oxford University Press, vol. 25(6), pages 955-975.
    5. Russell Thomson, 2013. "Measures of R&D Tax Incentives for OECD Countries," Review of Economics and Institutions, Università di Perugia, vol. 4(3).

    More about this item


    innovation policy; R&D tax credits; R&D investment;

    JEL classification:

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

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