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Title: Beggar Thy Neighbor? The In-State, Out-of-State, and Aggregate Effects of R&D Tax Credits

Citation Type: Journal Article

Publication Year: 2009

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Abstract: The proliferation of R&D tax incentives among U.S. states in recent decades raises two questions: (i) Are these tax incentives effective in increasing in-state R&D? (ii) How much of any increase is due to R&D being drawn away from other states? This paper answers (i) “yes” and (ii) “nearly all.” The paper estimates an augmented R&D factor demand model using state panel data from 1981 to 2004. I estimate that the long-run elasticity of in-state R&D with respect to the in-state user cost is about –2.5, while its elasticity with respect to out-of-state user costs is about +2.5, suggesting a zero-sum game among states.

Url: https://www.mitpressjournals.org/doi/abs/10.1162/rest.91.2.431

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Authors: Wilson, Daniel

Periodical (Full): Review of Economics and Statistics

Issue: 2

Volume: 91

Pages: 431-436

Data Collections: IPUMS USA

Topics: Other

Countries: United States