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Tax incentives and firm size : effects on private R&D investment in Spain

Author

Listed:
  • Labeaga Azcona J.
  • Martínez-Ros E.
  • Mohnen P.

    (UNU-MERIT)

Abstract

The use of fiscal policy instruments to stimulate private RD is widespread and important in some countries like Spain. In this paper we explore the effectiveness of RD tax incentives on knowledge capital accumulation in Spanish manufacturing firms using an unbalanced panel and compare the estimates based on claimed and claimable tax reductions. We find that while large firms use the programme more than small ones, the impact of the programme measured by the price elasticity is smaller for large firms than for SMEs. The price elasticities are higher when the ex-ante claimable tax reductions rather than the ex-post actually claimed tax eductions are used to compute the user cost of RD.

Suggested Citation

  • Labeaga Azcona J. & Martínez-Ros E. & Mohnen P., 2014. "Tax incentives and firm size : effects on private R&D investment in Spain," MERIT Working Papers 081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2014081
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    File URL: https://www.merit.unu.edu/publications/wppdf/2014/wp2014-081.pdf
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    References listed on IDEAS

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    1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    2. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    3. Anastasia Semykina & Jeffrey M. Wooldridge, 2013. "Estimation of dynamic panel data models with sample selection," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 47-61, January.
    4. 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.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. repec:kap:sbusec:v:53:y:2019:i:3:d:10.1007_s11187-018-0074-9 is not listed on IDEAS
    3. Heike Belitz, 2015. "Steuerliche Förderung von Forschung und Entwicklung: Erfahrungen aus dem Ausland," DIW Roundup: Politik im Fokus 85, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Business Taxes and Subsidies; Fiscal Policies and Behavior of Economic Agents; Management of Technological Innovation and R&D;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • 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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