Is There Empirical Evidence on How the Implementation of a Universal Basic Income (UBI) Affects Labour Supply? A Systematic Review

Short-term impacts of Universal Basic Income on population mental health inequalities in the UK: A microsimulation modelling study

BACKGROUND

Population mental health in the United Kingdom (UK) has deteriorated, alongside worsening socioeconomic conditions, over the last decade. Policies such as Universal Basic Income (UBI) have been suggested as an alternative economic approach to improve population mental health and reduce health inequalities. UBI may improve mental health (MH), but to our knowledge, no studies have trialled or modelled UBI in whole populations. We aimed to estimate the short-term effects of introducing UBI on mental health in the UK working-age population.

METHODS AND FINDINGS

Adults aged 25 to 64 years were simulated across a 4-year period from 2022 to 2026 with the SimPaths microsimulation model, which models the effects of UK tax/benefit policies on mental health via income, poverty, and employment transitions. Data from the nationally representative UK Household Longitudinal Study were used to generate the simulated population (n = 25,000) and causal effect estimates. Three counterfactual UBI scenarios were modelled from 2023: "Partial" (value equivalent to existing benefits), "Full" (equivalent to the UK Minimum Income Standard), and "Full+" (retaining means-tested benefits for disability, housing, and childcare). Likely common mental disorder (CMD) was measured using the General Health Questionnaire (GHQ-12, score ≥4). Relative and slope indices of inequality were calculated, and outcomes stratified by gender, age, education, and household structure. Simulations were run 1,000 times to generate 95% uncertainty intervals (UIs). Sensitivity analyses relaxed SimPaths assumptions about reduced employment resulting from Full/Full+ UBI. Partial UBI had little impact on poverty, employment, or mental health. Full UBI scenarios practically eradicated poverty but decreased employment (for Full+ from 78.9% [95% UI 77.9, 79.9] to 74.1% [95% UI 72.6, 75.4]). Full+ UBI increased absolute CMD prevalence by 0.38% (percentage points; 95% UI 0.13, 0.69) in 2023, equivalent to 157,951 additional CMD cases (95% UI 54,036, 286,805); effects were largest for men (0.63% [95% UI 0.31, 1.01]) and those with children (0.64% [95% UI 0.18, 1.14]). In our sensitivity analysis assuming minimal UBI-related employment impacts, CMD prevalence instead fell by 0.27% (95% UI -0.49, -0.05), a reduction of 112,228 cases (95% UI 20,783, 203,673); effects were largest for women (-0.32% [95% UI -0.65, 0.00]), those without children (-0.40% [95% UI -0.68, -0.15]), and those with least education (-0.42% [95% UI -0.97, 0.15]). There was no effect on educational mental health inequalities in any scenario, and effects waned by 2026. The main limitations of our methods are the model's short time horizon and focus on pathways from UBI to mental health solely via income, poverty, and employment, as well as the inability to integrate macroeconomic consequences of UBI; future iterations of the model will address these limitations.

CONCLUSIONS

UBI has potential to improve short-term population mental health by reducing poverty, particularly for women, but impacts are highly dependent on whether individuals choose to remain in employment following its introduction. Future research modelling additional causal pathways between UBI and mental health would be beneficial.

How, why and for whom does a basic income contribute to health and wellbeing: a systematic review

Ensuring that people have a sufficient income to meet their basic needs and that it keeps pace with costs of living are important when considering ways to reduce health inequities. Many have argued that providing a basic income is one way to do this. The aim of this review is to provide an overview of the existing peer reviewed evidence on the health and wellbeing impacts of basic income interventions. A systematic search of ten electronic databases was conducted in June 2022. Eligible publications examined any effect on health and wellbeing from unconditional cash transfers. All study designs were included, and no limitations were placed on duration of cash transfer trials, location of study, study population or on amount of money provided through the cash transfer. Ten studies were included in this review. Studies employed a range of methods. All studies reported on a trial of Universal Basic Income in either a region or a town. Studies explored a range of health and wellbeing related outcomes including crime, quality of life, employment, subjective wellbeing, tuberculosis and hospitalization. Basic income programs can mitigate poverty in a time of economic upheaval and have the potential to become a powerful policy tool to act upon the determinants of health and reduce health inequality. This review found a small number of trials indicating a positive impact on health and wellbeing. More trials which track recipients over a longer period are needed to provide more robust evidence for the impact of basic income programs.

Employment status, psychological needs, and mental health: Meta-analytic findings concerning the latent deprivation model

Marie Jahoda's latent deprivation model proposes that unemployed people have a worse mental health compared to employed people. This is because they suffer not only from a lack of the manifest function of employment (earning money), but also from a lack of five so-called latent functions of employment: Time structure, social contact, collective purpose (i.e., the sense of being useful to other people), status, and activity. In order to test the basic assumptions of this theory, a study based on meta-analytic methods was conducted. Results showed that employed people reported higher levels on all five latent functions, as well as on the manifest function, compared to unemployed people. They also report more latent functions than people who are out of the labor force (OLF). Moreover, OLF-people reported more manifest and latent functions than unemployed people. Specific analyses for three OLF-subgroups found retired people to be almost as deprived of the latent functions (but not the manifest function) as unemployed people, while students were more similar to employed people but still experienced some manifest and latent deprivation. For homemakers, the effect sizes pointed in the expected direction, but they were not significant. Thus, the proposition that employment is the best provider of the latent functions was generally endorsed, although homemakers need further scrutiny in future studies. All latent functions, as well as the manifest function, emerged as significant independent predictors of mental health, when the influence of the other manifest and latent functions was controlled. Together, the dimensions in the model explained 19% of variation in mental health.

The mental health effects of a Universal Basic Income: A synthesis of the evidence from previous pilots

INTRODUCTION

Amongst its advocates, one of the key arguments for a Universal Basic Income (UBI) is its potential to improve population mental health. However, while previous authors have variously examined the potential effects of UBI on income, employment and labour market demand, the direct mental health consequences of previous pilots have been less frequently examined. The purpose of this paper is therefore to conduct a review of the literature on UBI and to re-examine the existing research with a mental health focus.

METHODS

Six electronic databases were used to conduct a review of the literature. We searched for empirical research studies of any design, conducted since the year 2000 in High Income Countries, exploring the effects of interventions similar to a UBI on the mental health of children or working-age adults. Grey literature and government reports were also included.

RESULTS

A total of 1566 articles were screened of which seven peer reviewed studies and eight governmental reports were ultimately selected for inclusion. None of the identified studies directly compared the impact of individual payments with those made on a household basis, or the effects of payments which were truly universal. However, several studies evaluated the mental health outcomes associated with payments provided unconditionally, and consistently reported clear and significant improvements in mental wellbeing. Potential mediating factors included improved time with family and friends, a reduction in perceived stigma and a renewed sense of hope for the future.

CONCLUSIONS

Our review has produced evidence to suggest that prophesies surrounding the mental health benefits of a UBI are at least partially justified. However, future studies should aim to be conducted at an area level, with an adequately powered sample size, and investigate interventions of a considerable duration using a longitudinal design.