Do tax incentives increase firm innovation? an RD design for R&D, patents, and spillovers Antoine Dechezleprêtre, Elias Einiö, Ralf Martin, Kieu-Trang Nguyen and John Van Reenen
Contributor(s): Dechezleprêtre, Antoine
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ArticleSubject(s): INVERSIONES EMPRESARIALES | INVESTIGACION | DESARROLLO TECNOLOGICO | INCENTIVOS FISCALES | INCIDENCIA Y TRASLACION | INNOVACIÓN | EMPRESAS
In:
American Economic Journal : Economic Policy v. 15, n. 4, November 2023, p. 486-521Summary: 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.
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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.
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