CeMPA WP 03/21 - Modelling Universal Basic Income using UKMOD

UKMOD is a publicly available, free programme for the static microsimulation of tax and benefits in the UK, developed by the Centre for Microsimulation and Policy Analysis (CeMPA) at the University of Essex with funding from the Nuffield Foundation. [...] Therefore, UKMOD allows to examine both the design and the distributional and fiscal implications of a Basic Income scheme, including its interaction with the rest of the tax and benefit system. [...] Criteria for the design of a Basic Income scheme In order for a Basic Income scheme to reduce income inequality and poverty levels and improve income security, it would need to fulfil a set of criteria in its design and impact. [...] - Method 3: to calculate the effect on the fiscal balance of given changes to both the level of BI and the tax schedule. [...] In a nutshell the question is: for whom does the replacement of means-tested benefits by non-means- tested BI reduce average METRs more than the rise in tax rates increases them? Tables 4 and 5 show the changes in average METR (from taxes, benefits and in total) for each scheme relative to the baseline METR, for different groups.