UNU-MERIT Working Papers Series
Measuring the Effectiveness of R&D tax credits in the Netherlands
Boris Lokshin & Pierre Mohnen #2007-025This 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
UNU-MERIT Working Papers
ISSN 1871-9872
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