Labor tax and relative cost of R&D
This paper examines the impact of taxation of labor on investment in Research and Development. Given the central role of R&D as an en- gine of business expansion and economy growth, issue of estimating the barriers to R&D is a vital one, both from theoretical and practical point of view. We analyse the impact of labor taxation on decision to invest in R&D. We show that labor taxation changes relative costs of R&D investment versus fixed capital formation. It leads to allocation of investment more towards physical capital formation than R&D invest- ment. In the empirical part of the paper, using panel and cross-section of countries, we shed light on the impact of taxation of labor on R&D. Our estimates indicate that labor tax has a significant adverse impact on R&D investment, and its negative impact is larger for R&D than for physical capital.
Year of publication: |
2014
|
---|---|
Authors: | Lewandowska-Kalina, Monika ; Kalina, Lech |
Published in: |
Applied Econometrics Papers. - Zakład Ekonometrii Stosowanej. - Vol. 1.2014, 1, p. 1-19
|
Publisher: |
Zakład Ekonometrii Stosowanej |
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