Working Paper #2008-034
Wage effects of R&D tax incentives: Evidence from the Netherlands
This paper examines the impact of the Dutch R&D tax incentives program,
known as WBSO, on the wages of R&D workers. In our model these wages are
partly determined by the government’s WBSO tax disbursements. We
construct detailed firm- and time specific R&D tax credit rates as a
function of the R&D tax incentives scheme to capture the wage effects of
the government R&D support. An instrumentalvariables econometric model
is estimated using an unbalanced firm-level panel data covering the
period 1996-2004. After controlling for firm and industry effects and
business cycle fluctuations, R&D tax incentives are found to increase
R&D wages. The R&D wage effect of these incentives is smaller than their
effect on real R&D investment, but it is still sizeable. The elasticity
of the R&D wage with respect to the fraction of the wage supported by
the WBSO scheme is estimated at 0.1.
- Keywords
-
- price effect of tax incentives
- tax credits
- panel data model
- R&D wages
- JEL codes
-
- O32
- O38
- H25
- J30
- C23
- UNU-MERIT
- Working
- Papers
- ISSN
- 1871-9872
Cite this as
APA 7th ed.Lokshin, B., & Mohnen, P. (2008). Wage effects of R&D tax incentives: Evidence from the Netherlands (UNU-MERIT Working Paper No. 2008-034). UNU-MERIT. https://unu-merit.nl/publications/working-papers/abstract/?id=3426