Which Design Works? A Meta-Regression Analysis of the Impacts of R&D Tax Incentives

39 Pages Posted: 13 Mar 2020

See all articles by Florence Blandinières

Florence Blandinières

ZEW – Leibniz Centre for European Economic Research

Daniela Steinbrenner

ZEW – Leibniz Centre for European Economic Research

Bernd Weiß

GESIS - Leibniz Institute for the Social Sciences

Date Written: 2020

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.

Keywords: Meta-analysis - research and innovation policies - tax incentives

JEL Classification: C08 - O32 - H25 - O38

Suggested Citation

Blandinières, Florence and Steinbrenner, Daniela and Weiß, Bernd, Which Design Works? A Meta-Regression Analysis of the Impacts of R&D Tax Incentives (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-010, Available at SSRN: https://ssrn.com/abstract=3553745 or http://dx.doi.org/10.2139/ssrn.3553745

Florence Blandinières (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Daniela Steinbrenner

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Bernd Weiß

GESIS - Leibniz Institute for the Social Sciences ( email )

Unter Sachsenhausen 6-8, 50667 Köln
Mannheim, 68159
Germany

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