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We use a change in Canadian tax law to examine how small private firms respond to the R&D tax credit. Our estimates imply an R&D user-cost elasticity above unity. Contract R&D expenditures are more elastic than the R&D wage bill. Firms that perform contract research or recently invested in R&D...
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In 2004, Canada changed the eligibility rules for its Scientific Research and Experimental Development (SRED) tax …
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