The labor effects of R&D tax incentives : evidence from VC-backed startups
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 1451-1482 |
| Journal / Publication | Review of Finance |
| Volume | 28 |
| Issue number | 5 |
| Online published | 9 Aug 2024 |
| Publication status | Published - Sept 2024 |
Link(s)
Abstract
We evaluate the impact of the Protecting Americans from Tax Hikes (PATH) Act of 2015, which allowed some existing venture-capital-backed startups to monetize their research and development (R&D) tax credits against payroll taxes in the United States. We show that marginally eligible startups increase their demand for R&D workers more than marginally ineligible startups after the PATH Act’s enactment. These effects are stronger among startups that are financially constrained. Marginally eligible startups subsequently recruit workers with more education and experience and file more patents with new inventors. Our findings suggest payroll tax credits are effective in scaling startups and stimulating R&D activities through skilled labor recruitment.
© The Author(s) 2024.
© The Author(s) 2024.
Research Area(s)
- venture capital, entrepreneurship, R&D tax credits, payroll tax credits, skilled labor, startup scaling
Citation Format(s)
The labor effects of R&D tax incentives: evidence from VC-backed startups. / Chen, Jun; Hshieh, Shenje.
In: Review of Finance, Vol. 28, No. 5, 09.2024, p. 1451-1482.
In: Review of Finance, Vol. 28, No. 5, 09.2024, p. 1451-1482.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
