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An Evaluation of the Innovation Tax Credit

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Listed:
  • Simon Bunel
  • Benjamin Hadjibeyli

Abstract

[eng] The Innovation tax credit (crédit d’impôt innovation, CII) is an extension of the Research tax credit (crédit d’impôt recherche, CIR) intended to boost the incentive effect of the latter on SMEs to encourage them to engage in the creation of new products via the development of prototypes or pilot installations. Introduced in 2013, it represented €120 million of tax credit in 2014 for some 5,300 recipients. This article seeks to measure the impact of the introduction of this scheme on its beneficiaries over the period from 2013 to 2016. Using a difference-in-differences method following propensity score matching, we find a greater increase in employment in the short term for companies benefiting from the scheme, along with a more marked increase in their turnover in the medium term. A greater increase in the number of new products produced by the beneficiaries is also observed. Finally, the introduction of the CII was accompanied by a reduction in the research expenditure reported under the CIR.

Suggested Citation

  • Simon Bunel & Benjamin Hadjibeyli, 2021. "An Evaluation of the Innovation Tax Credit," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 526-527, pages 113-135.
    • Handle: RePEc:nse:ecosta:ecostat_2021_526d_7
    DOI: https://doi.org/10.24187/ecostat.2021.526d.2055
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    References listed on IDEAS

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    1. S. Quantin, 2018. "Estimation avec le score de propension sous R Abstract : Ce document présente les principales méthodes économétriques utilisant le score de propension pour comparer deux groupes en ajustant des effets," Documents de Travail de l'Insee - INSEE Working Papers m2018-01, Institut National de la Statistique et des Etudes Economiques.
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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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