The effects of corporate taxation on innovation : an empirical analysis on the effects of corporate taxation on innovation in Europe
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- Master Thesis 
This thesis aims at analyzing the relationship between corporate income taxation and innovation in Europe to further the discussion about which policy tool is optimal to encourage innovation. This was done using a fixed effects regression on a panel of data of European OECD member states for the time period 1981-2017, using the statutory corporate tax rate and the number of patents per million inhabitants. The results of both regressions fail to show a significant effect of corporate income taxation on the number of patents. This is in contrast to previous findings of studies using U.S. data, which could be for a few different reasons, such as differences in patenting systems, economic and cultural structure, but also methodology. The obtained results point to corporate income tax not being the optimal instrument to encourage innovation and decreasing it to be unlikely to have the desired effect, which means more granular and directed research is required into what instruments, which could be tax or non-tax, have the best effects on innovation in Europe.