Lower employer contributions for employees in research and development means that companies recruit more researchers. This is shown by a new report from Tillväxtanalys.

In 2014, the Swedish government introduced a specific kind of R&D tax relief, reducing
firms’ payroll tax liability for R&D staff. In comparison to traditional tax incentives where
all qualified R&D expenditures can be deducted from taxable income or income taxes, the Swedish subsidy specifically benefits firms with labor-intensive R&D and loss-making
firms. In addition, there is a monthly subsidy cap per firm, which benefits small firms.
Exploiting the policy design, we perform a difference-in-difference analysis with firmlevel panel data on R&D subsidies combined with data on employed scientists over the
time period 2011–19.

We find that the subsidy has positive effects on the number and
share of scientists, with magnitudes of between 32 and 107 and 30 and 43 percent,
respectively. Moreover, the treatment effect of the subsidy does not differ across firms by size or debt ratio but is somewhat higher for labor-intensive firms, although the last
result is ambiguous.