Can Investment Incentives Crowd Out Innovation? Evidence from China

Ke, Shaowei; Lu, Yao; Shi, Xinzheng; Zhang, Yeqing

doi:10.2139/ssrn.3459276

Cited by 2 publications

(5 citation statements)

References 24 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Similarly, Ke et al. (2019) show that firms may pay additional operating costs on equipment and thus reduces its percentage of labor input.…”

Section: Resultsmentioning

confidence: 95%

“…KONG aNd XIONG Similarly, Ke et al (2019) show that firms may pay additional operating costs on equipment and thus reduces its percentage of labor input. However, the significance of human capital investment can never be overemphasized.…”

Section: Crowd-out Effect Of Human Capitalmentioning

confidence: 99%

“…Similarly, Ke et al. (2019) also believe that VAT reform can crowd out innovation when firms are faced with intermediate‐level financial constraints.…”

Section: Introductionmentioning

confidence: 99%

“…However, the VAT reform can also bring about the adverse effect. More precisely, the reduction in the firm's innovation efforts after VAT reform has been well-observed (Howell, 2016;Ke et al, 2019;Nie et al, 2010). It is possibly true that by buying equipment, firms can benefit from the VAT reform immediately, yet they need to take risks in choosing independent technology innovation (Nie et al, 2010).…”

mentioning

confidence: 99%

“…Our conjecture is consistent with Cai and Harrison (2011), who argue that the primary impact of VAT reform is to encourage firms to substitute physical capital for labor. Similarly, Ke et al (2019) also believe that VAT reform can crowd out innovation when firms are faced with intermediate-level financial constraints.…”

mentioning

confidence: 99%

See 4 more Smart Citations

Unintended consequences of tax incentives on export product quality: Evidence from a natural experiment in China

Kong

Xiong

2020

Rev International Economics

View full text Add to dashboard Cite

This study investigates the effects of tax incentives on export product quality. Using a staggered value‐added tax reform in China as exogenous shocks, our difference‐in‐differences estimation shows that tax cuts causally reduce product quality at the firm‐level (product‐level) by 5.3% (8.6%). A plausible mechanism appears to be the output and export expansion, which crowd out human capital and thus undermine quality. The results are more pronounced for non‐state‐owned firms, firms under high tax reinforcement effort, and firms subjecting to high financial constraints. This study provides clear policy implications by shedding light on the unintended consequences of tax incentives on export product quality.

show abstract

“…Similarly, Ke et al. (2019) show that firms may pay additional operating costs on equipment and thus reduces its percentage of labor input.…”

Section: Resultsmentioning

confidence: 95%

Section: Crowd-out Effect Of Human Capitalmentioning

confidence: 99%

“…Similarly, Ke et al. (2019) also believe that VAT reform can crowd out innovation when firms are faced with intermediate‐level financial constraints.…”

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

See 3 more Smart Citations