Do tax incentives increase firm innovation? An RD design for R&D, patents, and spillovers
Dechezleprêtre, A., Einiö, E., Martin, R., Nguyen, K. & Van Reenen, J.
(2023).
Do tax incentives increase firm innovation? An RD design for R&D, patents, and spillovers.
American Economic Journal: Economic Policy,
15(4), 486 - 521.
https://doi.org/10.1257/pol.20200739
(2023).
Do tax incentives increase firm innovation? An RD design for R&D, patents, and spillovers.
American Economic Journal: Economic Policy,
15(4), 486 - 521.
https://doi.org/10.1257/pol.20200739
We present causal evidence of R&D tax incentives' positive impacts on a firm's own innovation and that of its technological neighbors. Exploiting a change in size-based eligibility thresholds for R&D tax relief, we implement a Regression Discontinuity Design using administrative data. We find significant effects of tax relief on (quality-adjusted) patenting (and R&D) that persist up to seven years, and evidence of R&D spillovers on the innovation of technologically close firms. We can rule out elasticities of patenting with respect to R&D user cost of under 2 at the 5 percent level and show that our large effects are driven by financially constrained treated firms.
Explore Further
- D20 - General
- H25 - Business Taxes and Subsidies
- H32 - Firm
- O31 - Innovation and Invention: Processes and Incentives
- O34 - Intellectual Property Rights: National and International Issues
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Dechezlepretre, A., Martin, R., Nguyen, K., Van Reenen, J. & Einio, E.
(2024).
Data and Code for: Do Tax Incentives Increase Firm Innovation? An RD Design for R&D, Patents, and Spillovers.
[Dataset]. OpenICPSR.
https://doi.org/10.3886/e181362