Examining the Impact of R&D Tax Credits on Employment Growth Across Economic Sectors
Published in Emerging Science Journal, 2025
Recommended citation: 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
Abstract: 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 holders across economic activity sectors. 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 allows us to isolate the effects across periods, comparing treated firms with controls within sectors classified by the NACE Rev. 2 system. 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%. Using firm-level data and a staggered DiD design, this study offers granular insights into sectoral variations, underscoring the importance of sector-specific policies.