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Dynamics of firm participation in R&D tax credit and subsidy programs
Busom i Piquer, Isabel; Martínez Ros, Ester
Corchuelo Martínez-Azua, Beatriz; Universitat Autònoma de Barcelona. Departament d'Economia Aplicada
We provide comparative evidence on R&D tax credit and subsidy programs by studying whether firms' participation in each program exhibits state dependence and whether cross program interactions exist and are significant. We use a panel of manufacturing Spanish firms, which could use both types of support, to estimate a random effects bivariate dynamic probit model of program participation. We find that true state dependence of participation in R&D subsidy and tax credit programs accounts respectively for about 55% and 60% of observed persistence. In contrast, we do not find evidence of cross program interaction, suggesting that each tool is used by firms with different profiles. Digging on the role of some observable variables, we find that both programs reach on average stable R&D performers, and that they do not foster participation of young firms relative to older ones. We also identify significant differences across programs: while diversified and commercially successful firms are more likely to use tax incentives, those with high productivity are more likely to obtain subsidies. We discuss some policy implications of these findings.
2015-03
R&D
Innovation policy
Tax incentives
Subsidies
Persistence
Dynamic random effects
Bivariate probit
00 - Ciència i coneixement. Investigació. Cultura. Humanitats
33 - Economia
Investigació
Incentius fiscals
Empreses -- Innovacions tecnològiques
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35 p.
Working Paper
Universitat Autònoma de Barcelona. Departament d'Economia Aplicada
Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia Aplicada);15.03
         

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