Finland launched a two-year basic income experiment in 2017. Basic income is one example in a long line of public policy pilot experiments that seek to produce information to support decision-making.
In Finland, income security is guaranteed to everyone. However, the basis of the current social security system was laid down in a different time. Experimentation with new ideas can lead to solutions that better fit present-day challenges.
Atypical employment relationships are becoming increasingly common, and although Finland has an extensive social safety net, it doesn’t fully cater to the needs of modern working life.
The aim of the basic income experiment was to find out if the social security model could be simplified, explore more flexible ways of accepting employment, and to find out how financial incentives affect the acceptance of job offers. At present, finding a job doesn’t necessarily increase the income of an unemployed person, because earnings lower social benefits.
HOW IT WAS DONE
A total of 2,000 people were randomly selected for the basic income experiment. For a period of two years, the participants received a monthly basic income of 560 euros. The participants received this sum automatically every month, regardless of whether they had some other income or not, without any needs assessment, and with no conditions attached. Furthermore, they were not required to pay tax on basic income.
The recipients of a basic income were selected through random sampling among those who in November 2016 received an unemployment benefit. The control group consisted of those who in November 2016 received an unemployment benefit but were not selected for the experiment.
ANALYSING THE DATA
During the trial, data on the employment, market income, registration as a jobseeker, participation in employment promotion measures and social benefit take-up of the participants was gathered.
Analysis of the effects begun in January 2019 after the experiment had ended. The effect of basic income on the employment rate and wellbeing of the participants is evaluated.
The final results will be published in stages during 2019 and 2020.
The basic income experiment seems to have had positive effects on the perceived wellbeing of the participants. When the participants and a reference group were asked to assess their health, the participants were more positive in their assessment. They also felt that the social security system involved less bureaucracy than the reference group did. Based on the results of the first year of the experiment, the impact on employment appears modest.
The study of the employment effects of the basic income experiment is based on register data for the first year of the experiment. The register data are available with a one year delay, which means that the results for the second year of the experiment will be published in the first few months of 2020.
The basic income experiment was an exceptional social experiment both domestically in Finland and internationally in that it was set up as a nation-wide, randomised field experiment. Participation in the experiment was not voluntary, which means that it is possible to draw more reliable conclusions of the effects of the experiment than was the case in previous experiments which were based on voluntary participation.
Even though the basic income model developed for the experiment is not likely to be adopted as such for more extensive use, the data from the experiment can be used to reform the Finnish social security system. The lessons learned while planning and implementing the experiment provide a solid base for the planning of new ambitious social experiments.
You can read more about the basic income experiment on the website of Kela, The Social Insurance Institution of Finland.