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Effectiveness of Fiscal Incentives for R&D: Quasi-experimental evidence

Guceri, Irem and Liu, L (2019) Effectiveness of Fiscal Incentives for R&D: Quasi-experimental evidence. American Economic Journal: Economic Policy, 11 (1). pp. 266-291.


We exploit a 2008 UK policy reform that increased the tax incentives for R&D in medium-sized enterprises relative to large ones, to overcome the endogeneity of exposure to such tax credits. We estimate a difference-in-difference design on the universe of corporation tax filings in the United Kingdom, combined with other datasets. We find a positive and significant impact of tax credits for R&D, implying a user-cost elasticity estimate of around −1.6. This magnitude implies around $1 in additional private R&D spending per dollar foregone in tax revenue.

Item Type: Article
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Related URLs:
Date Deposited: 25 Mar 2019 14:59
Last Modified: 25 Mar 2019 14:59
Funders: ESRC - ES/L000016/1, Oxford University Said Foundation Research Assistantship Award

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