THE IMPACT OF R&D INVESTMENT ON PRODUCTIVITY–NEW EVIDENCE USING LINKED R&D–LRD DATA

This paper uses confidential Census longitudinal microdata to examine the association between R&D and productivity for the period 1972–1985. These data allow for significant improvements in measurement and model specification, yielding more precise estimates of the returns to R&D. Our results confirm the findings of existing studies: 1) positive returns to R&D investment 2) higher returns to company‐financed research 3) a productivity “premium” on basic research These results are robust to adjustments for “influential outliers.” Also, our evidence suggests that the return to company‐financed R&D is an increasing function of firm size.