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State Research and Development Tax Credits

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  • James C. Hearn
  • T. Austin Lacy
  • Jarrett B. Warshaw

Abstract

By 2010, all but 12 U.S. states had adopted some form of research and development tax credits. The forces driving the rapid rise and spread of this policy remain unclear. This event history analysis finds adoption to be associated with higher state unemployment levels, supporting the notion of “policy-making from disadvantage.†Yet higher patenting activity is also associated with adoption, suggesting that having a strong preexisting research and development (R&D) infrastructure facilitates adoption. In the 1980s, having a Republican governor apparently propelled adoption, but partisan influences disappeared in later years. Having a governorship with constitutionally strong budgetary power and having a centralized governing board for higher education are associated with adoption, and interaction analyses indicate that the combination of a centralized board and a higher number of research universities are especially positive forces in adoption. The socioeconomic, political, and structural influences found in this article suggest several potentially fruitful directions for future analyses.

Suggested Citation

  • James C. Hearn & T. Austin Lacy & Jarrett B. Warshaw, 2014. "State Research and Development Tax Credits," Economic Development Quarterly, , vol. 28(2), pages 166-181, May.
    • Handle: RePEc:sae:ecdequ:v:28:y:2014:i:2:p:166-181
    DOI: 10.1177/0891242413517135
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    References listed on IDEAS

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    Cited by:

    1. Catherine Fazio & Jorge Guzman & Scott Stern, 2019. "The Impact of State-Level R&D Tax Credits on the Quantity and Quality of Entrepreneurship," NBER Working Papers 26099, National Bureau of Economic Research, Inc.

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