Agrawal, Ajay
[Verfasser:in]
;
Rosell, Carlos
[Sonstige Person, Familie und Körperschaft];
Simcoe, Timothy S.
[Sonstige Person, Familie und Körperschaft]National Bureau of Economic Research
Do Tax Credits Affect R&D Expenditures by Small Firms? Evidence from Canada
Erschienen:
Cambridge, Mass: National Bureau of Economic Research, October 2014
Erschienen in:NBER working paper series ; no. w20615
Umfang:
1 Online-Ressource
Sprache:
Englisch
DOI:
10.3386/w20615
Identifikator:
Reproduktionsnotiz:
Hardcopy version available to institutional subscribers
Entstehung:
Anmerkungen:
Mode of access: World Wide Web
System requirements: Adobe [Acrobat] Reader required for PDF files
Beschreibung:
We exploit a change in eligibility rules for the Canadian Scientific Research and Experimental Development (SRED) tax credit to gain insight on how tax credits impact small-firm R&D expenditures. After a 2004 program change, privately owned firms that became eligible for a 35 percent tax credit (up from a 20 percent rate) on a greater amount of qualifying R&D expenditures increased their R&D spending by an average of 15 percent. Using policy-induced variation in tax rates and R&D tax credits, we estimate the after-tax cost elasticity of R&D to be roughly -1.5. We also show that the response to changes in the after-tax cost of R&D is larger for contract R&D expenditures than for the R&D wage bill and is larger for firms that (a) perform contract R&D services or (b) recently made R&D-related capital investments. We interpret this heterogeneity as evidence that small firms face fixed adjustment costs that lower their responsiveness to a change in the after-tax cost of R&D