Venue：Tongji Building Block A Room 506

Speaker：CHEN Jieping, Tongji SEM

Abstract:

This paper tries to account for impact from both R&D tax incentives and subsidies policies on firm innovation in China. Unlike most of the literature, we look at the joint effect of the two R&D policies when they are awarded to firms simultaneously rather than separately, measuring firm innovation by input and output proxies, namely “R&D investment” and “number of patents application”. We use a firm-level survey data from Shanghai, China, and combine the propensity score matching method and the difference in difference method to effectively eliminate the selection bias problem. The results suggest that significant additionality effect exists when single policy implemented. However, the two policies act as substitutes to each other when they are jointly awarded to firms. In addition, heterogeneity analyses show how these effects differ across firms characterized by different amount of direct subsidy, enterprise size and financial conditions.