Tax progressivity and R&D employment

d'Andria, Diego (2024): Tax progressivity and R&D employment.

Abstract

We study the relationship between tax progressivity and the size of the R&D workforce, using a panel of European countries in 2000-2019. We review the theoretical literature which provides opposing predictions about such a relationship. We then demonstrate that such relationship exists as a "within" effect, it is negative, meaning that a larger tax progressivity is associated with smaller shares of employment in R&D activities, and it remains statistically significant after performing a number of robustness tests. Differently to previous studies based on patenting inventors, we find no effect due to top tax rates on the size of R&D employment.

• Item Type: MPRA Paper
• Language: English
• Keywords: Tax progressivity; R&D; Labour force structure
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights

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