Author(s): Paredes, Alexandre ; Vasconcelos, Carolina ; Damásio, Bruno
Date: 2025
Persistent ID: http://hdl.handle.net/10362/184360
Origin: Repositório Institucional da UNL
Subject(s): Difference-in-Differences; Employment; Firms; Policy; R&D Tax Credits; General
Paredes, A., Vasconcelos, C., & Damásio, B. (2025). Examining the Impact of R&D Tax Credits on Employment Growth Across Economic Sectors. Emerging Science Journal, 9(2), 677-699. https://doi.org/10.28991/ESJ-2025-09-02-010 --- This work was supported by national funds through FCT (Fundação para a Ciência e a Tecnologia), under the project - UIDB/04152/2020 - Centro de Investigação em Gestão de Informação (MagIC)/NOVA IMS) (https://doi.org/10.54499/UIDB/04152/2020).
The present study probes the impact of Research and Development (R&D) tax credits on employment growth in Portugal from 2014 to 2022, particularly on the total employees, R&D staff, and PhD (Doctor of Philosophy) holders across economic activity sectors. Objectives: We aim to assess whether R&D tax credits lead to employment growth, particularly in industries reliant on highly skilled R&D personnel. Methods/Analysis: Using firm-level data from Portugal’s R&D survey, we apply a difference-in-differences (DiD) approach with an event study and staggered design for temporal analysis. This methodology, enhanced by a staggered design, allows us to isolate the effects across periods, comparing treated firms with controls within sectors classified by the NACE Rev. 2 system. Findings: Results reveal that R&D tax credits significantly enhance employment for R&D staff, with the information and communication sector having an 18.4% increase and the manufacturing sector rising 12.3%. Novelty/Improvement: Using firm-level data and a staggered DiD design, this study offers granular insights into sectoral variations, underscoring the importance of sector-specific policies. Findings provide valuable guidance for policymakers optimizing and enhancing the R&D tax credits framework to support employment at different levels of expertise and across different economic activity spheres.
