Universal Basic Income as an instrument of regional development policy: a micro-macro economic analysis for Scotland

Regional development now encompasses inclusive growth so that welfare spending becomes a potentially important policy for regions with devolved powers. Universal Basic Income (UBI), an unconditional payment to all citizens, has been gaining traction, including internationally. We provide a system-wide analysis of a region-specific UBI for Scotland on the level and distribution of regional activity. Using both micro- and macro-economic models we find that, although UBI has a beneficial effect on equity among households, it may adversely impact the level of economic activity unless there is a social contract in place and/ or there is a substantial stimulus to productivity.