This paper aimed to analyze the effectiveness of state R&D tax credit programs in the context of R&D-relevant policies and regional economic development policies. Although there were extensive theoretical recommendations for promoting private R&D, and state R&D tax credit programs have been one of the most popular regional economic development programs, only few evaluations of state R&D tax credit programs have been conducted. Inspired by this lack of previous study, this study provided an empirical finding for the effectiveness of these programs by applying a quasi-experimental approach, which means conducting experiments without randomness, for comparing states with tax credits and states with no credits.
For dealing with the embedded non-randomness, plausible other explanations that weaken the causal relationship between the programs and the effects were examined and ruled out as much as possible. Rival hypotheses were selected using different tax and government policies, overall business and R&D-specific environments, and firm characteristics. They were eliminated by constructing valid control groups, using the difference-in-differences and matching methods, selecting covariates and matching variables as observable variables, and absorbing year-specific fixed effects and cross-sectional-fixed effects as unobservable variables. The decision was made based on multiple estimates and multiple datasets. The research analyzed two sets of industries: the all industry group and high-technology industy.
The major findings are : 1) state R&D tax credits positively affect the increase in R&D spending and increase in employment; 2) positive effects on R&D spending are widespread across the all industry group while positive effects on employment are limited to high-technology industry overall; 3) positive effects on R&D spending are also spread out to different sized firms in both the all industry group and high-technology industry; and 4) positive effects on employment are found mainly in large firms in both the all industry group and high-technology industry.
The above findings support the utilization of state R&D tax credits. As an indirect intervention, state R&D tax credit programs can increase productivity and encourage innovation by generating additional private R&D activities. State R&D tax credit programs can also make a positive contribution to regional economic growth through the growth of R&D-relevant and high-technology industries.
| Identifer | oai:union.ndltd.org:PITT/oai:PITTETD:etd-08102006-113640 |
| Date | 15 August 2006 |
| Creators | Ho, Yujeung |
| Contributors | Deitrick, Sabina, Singh, Vijai, Chandra, Siddharth, Miller, David |
| Publisher | University of Pittsburgh |
| Source Sets | University of Pittsburgh |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.library.pitt.edu/ETD/available/etd-08102006-113640/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University of Pittsburgh or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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