experimental study on a universal basic income in finland

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Experimenting with Basic Income in Finland Olli Kangas ([email protected]) Professor, Research Director Kela, Social Insurance Institution of Finland

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Page 1: Experimental study on a universal basic income in Finland

Experimenting with Basic Income in Finland Olli Kangas ([email protected])

Professor, Research Director

Kela, Social Insurance Institution of Finland

Page 2: Experimental study on a universal basic income in Finland

Governmental mandate

• Prime Minister Juha Sipilä’s governmental program

includes a number of social experiments

• The basic income pilot study is one of them

• The aim is to reform existing social policy to better

match with societal changes, abolish work

disincentives and diminish bureaucracy

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Page 3: Experimental study on a universal basic income in Finland

Governmental mandate

• After an open bid, the preliminary study was

awarded to a Kela-led research consortium

consisting of: • The VATT Institute for Economic Research and the Swedish

School of Social Science, University of Helsinki

• Universities of Turku and Tampere

• Think tank Tänk

• The Finnish Innovation Fund (SITRA)

• Federation of Finnish Enterprises

• Experts representing municipalities and constitutional, social and

tax law

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Page 4: Experimental study on a universal basic income in Finland

Timetable and funding

• Timetable for the consortium:

• First hearing 5 December 2015

• Interim report 30 March 2016

• Final report 15 November 2016

• The experiment will start in the beginning of 2017

and will last for 2 years

• Results will be evaluated in 2019

• Funding comes from the Government

• €20 million for two years

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Page 5: Experimental study on a universal basic income in Finland

Wide popular support for basic income in Finland

• The wished-for medians are 1.3 times the level of

minimum pension

• Support among voters of all political parties:

• Left Alliance 86%, Social Democrats 69%, Greens

75%, Centre 62%, Finns Party 69%, Christian

Democrats 56%, Swedish People’s Party 83%,

National Coalition Party 54%

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Support Wished-for level

€ (median)

2002 63% € 622

2015 69% € 1,000

Page 6: Experimental study on a universal basic income in Finland

Models to be explored and developed

• Full basic income (BI)

• The level of BI is high enough to replace almost all

insurance-based benefits

• Monthly sum must be rather high – realistic?

• Partial basic income

• Replaces all ‘basic’ benefits but almost all insurance-based

benefits left intact

• Minimum level should not be lower than the current

minimum level of basic benefits (net approx. €550 a month)

• Negative income tax

• Income transfers via taxation

• Other models

• Perhaps low BI plus ‘participation’ income 6

Page 7: Experimental study on a universal basic income in Finland

Methods

• Specification of models to be explored

• Juridical aspects dealing with social legislation

• Taxation

• Juridical aspects dealing with the constitution (equal

treatment of residents and the right to social care and

income protection)

• Evaluating the costs with microsimulations

• Distribution of benefits and costs

• Which options appear to be feasible/unfeasible

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Page 8: Experimental study on a universal basic income in Finland

Methods

• Planning the experimental setting

• Constitutional limitations: demand of equal treatment for all

− Voluntariness → selection bias

− Two stage sampling among volunteers: Treatment and control

groups

− Obligatory:

− Local experiments to capture externalities

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Page 9: Experimental study on a universal basic income in Finland

Experimental settings (example of an optimal research setting, nothing selected yet)

• To get scientifically reliable results and evidence for

policy making the experimental setting must:

• Include a sufficient number of households (rather than

individuals)

• Be nationally representative

− A national level randomization, for instance 10,000 cases

• Include a county level experiment

− A random sample of, for instance, 10% of a county’s population

• Include local experiments to capture networking, institutional

and interaction effects and various externalities

− For example, local municipalities with 10%, 30% random

sampling and perhaps 2 municipalities with 100% samples

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Page 10: Experimental study on a universal basic income in Finland

Working group evaluates the models, research setting and samples

• The task for the working group is to plan the

experiment

• After the first report (due 30 March, 2016) the

Government will decide which models should be

further developed

• Later in 2016 the Government will decide which

model/s will be experimented with and what the

target population and experimental setting will be

• The expert group will prepare suggestions for the decision

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