Which design works? A meta-regression analysis of the impacts of R&D tax incentives

Blandinières, Florence ; Steinbrenner, Daniela ; Weiß, Bernd

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URL: https://madoc.bib.uni-mannheim.de/55081
URN: urn:nbn:de:bsz:180-madoc-550815
Document Type: Working paper
Year of publication: 2020
The title of a journal, publication series: ZEW Discussion Papers
Volume: 20-010
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
Business School > Accounting & Taxation (Juniorprofessur) (Campbell 2018-2022)
Außerfakultäre Einrichtungen > Graduate School of Economic and Social Sciences - CDSB (Business Studies)
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: C08 , O32 , H25 , O38,
Keywords (English): Meta-analysis , research and innovation policies , tax incentives
Abstract: A growing interest in R&D tax incentives as a way to sustain research and innovation efforts has given rise to a large number of evaluations. The absence of consensus in the literature about their impact on R&D is intertwined with the variety of underpinning R&D tax incentives designs. Our meta-analysis aims at explaining this heterogeneity by the designs characteristics of R&D tax incentives. We find that the type of design has a distinct impact on R&D demand in the short run. We argue that these distinct effects are the results of managing a trade-off between providing strong incentives for R&D and simplicity to claim R&D deduction. In this respect, incremental and volume-based designs find a balance between both dimensions while hybrid designs lack clarity and predictability in the short run. Their respective effect can be moderated by additional features (i.e. generosity, targeting rules) even if the latter increases complexity and decreases predictability. We conclude by highlighting the importance of having a stable, clear, and simple framework to enhance the effect of R&D tax incentives.

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