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Tax incentives for human capital accumulation and enterprise innovation quality: Evidence of a quasi-natural experiment in China

Author

Listed:
  • Li, Cuilan
  • Chen, Hailin
  • Xie, Weilin
  • Wang, Ping

Abstract

This study analyzes the impact of human capital tax incentives on enterprise innovation quality. For this purpose, it designs as a quasi-natural experiment, using China's pre-tax deduction policy for employee education and training expenses. The results confirm that tax incentives for human capital accumulation significantly enhance corporate innovation quality. The primary mechanisms driving this effect are the alleviation of financial constraints and the promotion of human capital accumulation. Moreover, this effect is stronger in regions with higher levels of financial development and greater human capital density.

Suggested Citation

  • Li, Cuilan & Chen, Hailin & Xie, Weilin & Wang, Ping, 2024. "Tax incentives for human capital accumulation and enterprise innovation quality: Evidence of a quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013710
    DOI: 10.1016/j.frl.2024.106342
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