Measuring the Effectiveness of R&D Tax Credits in the Netherlands

35 Pages Posted: 28 May 2008

See all articles by Boris Lokshin

Boris Lokshin

Maastricht University, School of Business and Economics

Pierre Mohnen

Maastricht University - UNU-MERIT

Date Written: 2007-12-01

Abstract

This paper examines the impact of the Dutch R&D fiscal incentive program, known as WBSO, on R&D capital formation. Taking a factor-demand approach we measure the elasticity of firm R&D capital accumulation to its user cost. An econometric model is estimated using a rich unbalanced panel covering the period 1996-2004 with firm-specific R&D user costs varying with tax incentives. Using the estimated user cost elasticity, we examine the impact of the R&D incentive program. We find evidence that the program of R&D incentives in the Netherlands has been effective in reducing the user cost of R&D and in stimulating firms' investment in R&D.

Keywords: R&D tax credits, panel data, crowding out, user-cost elasticity

JEL Classification: O32, O38, H25, H50, C23

Suggested Citation

Lokshin, Boris and Mohnen, Pierre, Measuring the Effectiveness of R&D Tax Credits in the Netherlands (2007-12-01). CIRANO - Scientific Publications 2007s-29 . Available at SSRN: https://ssrn.com/abstract=1133572 or http://dx.doi.org/10.2139/ssrn.1133572

Boris Lokshin

Maastricht University, School of Business and Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 388 3697 (Phone)
+31 43 325 4893 (Fax)

Pierre Mohnen (Contact Author)

Maastricht University - UNU-MERIT ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
31-43-3884464 (Phone)
31-43-3884495 (Fax)

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