Agrawal, Ajay, Rosell, Carlos and Simcoe, Timothy <br/><br/>
Tax credits and small firm R&D spending  

 - American Economic Journal Economic Policy   
 - 12(2), May, 2020: p.1-21  
<br/><br/> In 2004, Canada changed the eligibility rules for its Scientific Research and Experimental Development (SRED) tax credit, which provides tax incentives for R&D conducted by small private firms. Difference-in-difference estimates show a 17 percent increase in total R&D among eligible firms. The impact was larger for firms that took the tax credits as refunds because they had no current tax liability. Contract R&D expenditures were more elastic than the R&D wage bill. The response was also greater for firms that invested in R&D capital before the policy change. – Reproduced