How effective are level-based R&D tax credits? Evidence from the Netherlands(Article)(Open Access)
- aDepartment of Organization and Strategy, School of Business and Economics, Maastricht University and UNU-MERIT, PO Box 616, 6200 MD, Maastricht, Netherlands
- bDepartment of Quantitative Economics, School of Business and Economics, Maastricht University, UNU-MERIT and CIRANO, PO Box 616, 6200 MD, Maastricht, Netherlands
Abstract
This article examines the impact of the R&D fiscal incentive programme on R&D by Dutch firms. Taking a factor demand approach, we measure the elasticity of firm R&D capital accumulation to its user cost. Econometric models are estimated using a rich unbalanced panel of firm data covering the period 1996 to 2004 with firm specific R&D user costs varying with tax incentives. Using the estimated user cost elasticity, we perform a cost- benefit analysis of the R&D incentive programme. We find some evidence of additionality suggesting that the level based programme of R&D incentives in the Netherlands is effective in stimulating firms' investment in R&D. However, the hypothesis of crowding out can be rejected only for small firms. The analysis also indicates that the level based nature of the fiscal incentive scheme leads to a substantial social deadweight loss. © 2012 Taylor & Francis.
Indexed keywords
| GEOBASE Subject Index: | capitaleconometricsfiscal policyincentiveinvestmentpanel dataresearch and developmenttax system |
|---|---|
| Regional Index: | Netherlands |
- ISSN: 00036846
- Source Type: Journal
- Original language: English
- DOI: 10.1080/00036846.2010.543083
- Document Type: Article
- Publisher: Routledge
Lokshin, B.; Department of Organization and Strategy, School of Business and Economics, Maastricht University and UNU-MERIT, PO Box 616, 6200 MD, Maastricht, Netherlands;
© Copyright 2018 Elsevier B.V., All rights reserved.
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