The social costs and benefits of subsidising R&D

However, a tentative social cost-benefit account of the WBSO - the major Dutch R&D tax incentive scheme - shows that the available empirical evidence does not support an unqualified statement about the sign and size of the actual welfare effects of the WBSO.

Although the social returns to R&D may be large, the policy programme may support R&D that would have been done anyhow, it may raise R&D wages rather than R&D volume, or it may relocate researchers from jobs with similarly large social returns.

The analysis indicates that a further increase of the WBSO budget would have a relatively low impact. Other policy options show more promise: more focus on small and medium-sized firms, a shift to policy instruments directly targeting R&D labour supply, and a more selective admission of WBSO project proposals.

This publication is in Dutch.