Modelling the economic impacts of a Citizen’s Basic Income in Scotland

The aim of this project is to estimate the economic impacts if a Citizen’s Basic Income were implemented throughout Scotland. The project is being carried out jointly with the Fraser of Allander Institute at the University of Strathclyde and IPPR Scotland and will involve combining results from a tax-benefit microsimulation model and a general equilibrium model of the Scottish economy.

What is the need?

Work is currently taking place to assess the feasibility of carrying out a pilot of a Citizen’s Basic Income in parts of Scotland. However, any such pilot will not be on a large enough scale or of long enough duration to allow the full economic of Citizen’s Basic Income to be estimated. This project will fill this gap. More detail on the context for this work can be found at https://basicincome.scot/.

What are we doing?

The project will involve modelling the potential economic impact of a Citizen’s Basic Income in three stages.

Stage 1 will involve using a tax-benefit microsimulation model to estimate the direct effects of a Citizen’s Basic Income. This will involve simulating the net income for each member of a sample of the Scottish population where current policies continue unchanged, and where a Citizen’s Basic Income has been introduced.

This will allow calculation of the estimated change in income for each member of the sample, the effects of the policy on the distribution of income and on poverty, and the direct fiscal costs of the policy.

Stage 2 will involve using a general equilibrium model for the Scottish economy to estimate the longer-term effects on the macroeconomy of Scotland. Changes to household incomes and to the government’s fiscal position estimated during Stage 1 will be used as inputs to the macroeconomic modelling.

Stage 3 will involve using the tax-benefit microsimulation model to estimate the distributional, poverty and fiscal impacts of the macroeconomic changes estimated in Stage 2.

The MMU Policy Evaluation Research Unit will work with IPPR Scotland to carry out the parts of the project involving microsimulation modelling.

What will be the outcomes?

The results of the project will form part of the evidence base for the Scottish Government and other stakeholders when the decision on whether to implement a Citizen’s Basic Income is taken. The modelling work will also inform the wider debate about the potential costs and benefits of a Citizen’s Basic Income.

What are the timescales?

This project will be completed in January 2020.

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