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Do R&D tax incentives lead to higher wages for R&D workers? Evidence from the Netherlands

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  • Lokshin, Boris

    (UNU-MERIT/MGSoG, and School of Business and Economics, Maastricht University)

  • Mohnen, Pierre

    (UNU-MERIT/MGSoG, and School of Business and Economics, Maastricht University)

Abstract

This paper examines the impact of the Dutch R&D tax incentive scheme on the wages of R&D workers. We construct firm specific R&D tax credit rates that vary over time following variations in the Dutch R&D tax incentive program. Using instrumental variables we estimate a wage-sharing model with an unbalanced firm-level panel data covering the period 1997-2004. The elasticity of the R&D wage with respect to the fraction of the wage supported by the fiscal incentives scheme is estimated at 0.2 in the short run and 0.24 in the long run.

Suggested Citation

  • Lokshin, Boris & Mohnen, Pierre, 2012. "Do R&D tax incentives lead to higher wages for R&D workers? Evidence from the Netherlands," MERIT Working Papers 2012-058, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2012058
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    More about this item

    Keywords

    Research and Development; R&D; R&D workers; wages; tax incentives;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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