A spatial microsimulation approach to economic policy analysis in Scotland

Regional scientists have increasingly been playing a very important role in the development and application of spatial microsimulation models for policy analysis. It has long been argued that spatial microsimulation modelling has enormous potential for the evaluation of the socio-economic and spatial effects of major developments in the regional or local economy. This paper aims to add to this rapidly expanding work, by presenting a new spatial microsimulation model (SIMALBA) for Scotland (the development of which was co-funded by the Scottish Government) and by demonstrating how it can be used to perform what-if policy analysis in Scotland. The focus of the paper is on economic aspects of social and spatial inequality in the capital of Scotland, Edinburgh. The paper shows how spatial microsimulation modelling can address previously unanswered research questions in Scotland, particularly those relating to fiscal policy. The SIMALBA model has estimated income data for Scotland at output area level geography and this is the focus of the various ‘what-if’ policy scenarios. Simulated data has been created using a deterministic reweighing algorithm to build a spatial microsimulation model by combining UK Census data for 2001 and Scottish Health Survey (SHS) data for 2003. The analysis demonstrates the importance of geography by examining trends at OA level in Scotland. The paper concludes with a discussion of the simulated data and resulting policy scenarios as well as the impact of this analysis for policy formation in Scotland.