Measuring firm-level productivity convergence in the UK: the role of taxation and R&D investment

Bournakis, Ioannis ORCID: https://orcid.org/0000-0002-7065-9316, Sushanta, Mallick, Kernohan, David and Tsouknidis, Dimitris A. (2013) Measuring firm-level productivity convergence in the UK: the role of taxation and R&D investment. Working Paper. Queen Mary University of London, London. . [Monograph]

Preview

PDF Download (2MB) | Preview

Abstract

This paper examines the direct effects of corporate tax on firm productivity along with the interaction effects of tax policy and R&D activity on productivity at firm level for over 13,062 firms during 2004-2011. Our main findings are first, that there is evidence for productivity convergence and we find that there is a positive robust relationship between R&D and firm productivity, whereas tax policy has a negative distortionary effect on TFP. Second, firms with greater export orientation do not seem to achieve much improvement in productivity, whereas the favourable productivity effect in the case of R&D-based firms suggests that if there are tax incentives in place for R&D type activity, it can promote innovation and drive productivity convergence (lagging firms closing the technology gap with those at the frontier), particularly so when there is a continued decline in overall economic activity. The results also show a significant non-linear effect of tax rate on firm-level productivity, identifying an inverse U-shaped relationship.

Actions (login required)

View Item

Statistics

DownloadsShow export options

Export as CSVXMLJSON

Activity Overview

6 month trend

353Downloads

6 month trend

502Hits

Additional statistics are available via IRStats2.