Two for the Price of One? On Additionality Effects of R&D Subsidies: A Comparison between Flanders and Germany

29 Pages Posted: 22 Sep 2006 Last revised: 26 Aug 2008

See all articles by Kris Aerts

Kris Aerts

KU Leuven Research & Development (LRD)

Tobias Schmidt

Deutsche Bundesbank - Research Center

Date Written: 2006

Abstract

In this paper we empirically test whether public R&D subsidies crowd out private R&D investment in Flanders and Germany, using firm level data from the Flemish and German part of the Community Innovation survey (CIS III and IV). Both the non-parametric matching estimator and the conditional difference-in-difference estimator with repeated cross-sections (CDiDRCS) clearly indicate that the crowding-out hypothesis can be rejected: funded firms are significantly more R&D active than non-funded firms. In the domain of additionality effects of R&D subsidies, this paper is the first to apply the CDiDRCS method.

Keywords: R&D, Subsidies, Policy Evaluation, Conditional Difference-in-Difference

JEL Classification: C14, C21, H50, O38

Suggested Citation

Aerts, Kris and Schmidt, Tobias, Two for the Price of One? On Additionality Effects of R&D Subsidies: A Comparison between Flanders and Germany (2006). ZEW - Centre for European Economic Research Discussion Paper No. 06-063; KUL Working Paper No. MSI 0607. Available at SSRN: https://ssrn.com/abstract=931127 or http://dx.doi.org/10.2139/ssrn.931127

Kris Aerts (Contact Author)

KU Leuven Research & Development (LRD) ( email )

Waaistraat 6 P.B. 5105
Leuven, 3000
Belgium

Tobias Schmidt

Deutsche Bundesbank - Research Center ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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