Taxation and Innovation: What Do We Know?

21 Pages Posted: 20 May 2020

See all articles by Ufuk Akcigit

Ufuk Akcigit

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Center for Economic and Policy Research (CEPR)

Stefanie Stantcheva

Harvard University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 6, 2020

Abstract

Tax policies are a wide array of tools, commonly used by governments to influence the economy. In this paper, we review the many margins through which tax policies can affect innovation, the main driver of economic growth in the long-run. These margins include the impact of tax policy on i) the quantity and quality of innovation; ii) the geographic mobility of innovation and inventors across U.S. states and countries; iii) the declining business dynamism in the U.S., firm entry, and productivity; iv) the quality composition of firms, inventors, and teams; and v) the direction of research effort, e.g., toward applied versus basic research, or toward dirty versus clean technologies. We give ideas drawn from research on how the design of policy can allow policy makers to foster the most productive firms without wasting public funds on less productive ones.

JEL Classification: H21,H23,H25,O31,O33,O34,O38

Suggested Citation

Akcigit, Ufuk and Stantcheva, Stefanie, Taxation and Innovation: What Do We Know? (May 6, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-70. Available at SSRN: https://ssrn.com/abstract=3606300 or http://dx.doi.org/10.2139/ssrn.3606300

Ufuk Akcigit (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

HOME PAGE: http://www.ufukakcigit.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Center for Economic and Policy Research (CEPR) ( email )

London
United Kingdom

Stefanie Stantcheva

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

HOME PAGE: http://scholar.harvard.edu/stantcheva/home

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
10
Abstract Views
59
PlumX Metrics