Please use this identifier to cite or link to this item:
Reinthaler, Volker
Wolff, Guntram B.
Year of Publication: 
Series/Report no.: 
ZEI working paper B 21-2004
The present paper investigates the effectiveness of public subsidies to business enterprise research in a panel of OECD countries. We contribute to the literature by explicitly distinguishing between effects of a subsidy on R&D employment and expenditure, thereby accounting for a potential increase in scientists’ wages. The results indicate that subsidies are effective in generating additional research. We find that an increase in the direct subsidy rate of one percentage point leads to at least 1% more business R&D employment in the long run. Expenditure for business research increases by roughly 20-30% more than employment. We take this as evidence that subsidies also raise scientists’ wages. In addition, we find that there exists significant crowding out of private research through university research. Research performed in public non-university institutions seems to have no effect on private research.
Document Type: 
Working Paper

Files in This Item:
474.87 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.