08/02/2019

Preliminary results of the basic income experiment: self-perceived wellbeing improved, during the first year no effects on employment

Kela and the Ministry of Social Affairs and Health, press release 8 February 2019

The basic income experiment did not increase the employment level of the participants in the first year of the experiment. However, at the end of the experiment the recipients of a basic income perceived their wellbeing as being better than did those in the control group. The results are to some extent preliminary, and it is not yet possible to draw any firm conclusions regarding the effects of the basic income experiment.

During the evaluation of the basic income experiment we study the effects of the basic income on the employment status, income and wellbeing of the participants. The results of the register and survey study will be published first.

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.

‘On the basis of an analysis of register data on an annual level, we can say that during the first year of the experiment the recipients of a basic income were no better or worse than the control group at finding employment in the open labour market’, says Ohto Kanninen, Research Coordinator at the Labour Institute for Economic Research.

The recipients of a basic income had on average 0.5 days more in employment than the control group. The average number of days in employment during the year was 49.64 days for the recipients of a basic income and 49.25 for the control group.

The proportion that had earnings or income from self-employment was approximately one percentage point higher for the recipients of a basic income than for the control group (43.70% and 42.85%). Then again, the amount of earnings and income from self-employment was on average 21 euros lower for the recipients of a basic income than for the control group (€4,230 and €4,251).

Recipients of a basic income perceived their wellbeing as being better

The effects of the basic income experiment on wellbeing was studied through a survey which was done by phone just before the experiment ended.

According to the survey, the recipients of a basic income perceived their wellbeing as being better than did the control group. 55% of the recipients of a basic income and 46% of the control group perceived their state of health as good or very good. 17% of the recipients of a basic income and 25% of the control group experienced quite a high degree or a very high degree of stress.

‘The recipients of a basic income had less stress symptoms as well as less difficulties to concentrate and less health problems than the control group. They were also more confident in their future and in their ability to influence societal issues’, says Minna Ylikännö, Lead Researcher at Kela.

The recipients of a basic income were also more confident in their possibilities of finding employment. In addition, they felt that there is less bureaucracy involved when claiming social security benefits and they were more often than the control group of the opinion that a basic income makes it easier to accept a job offer or set up a business.

‘The results of the register analysis and the survey are not contradictory. The basic income may have a positive effect on the wellbeing of the recipient even though it does not in the short term improve the person’s employment prospects’, says Ylikännö.

The response rate for the survey was 23% (31% for the recipients of a basic income and 20% for the control group).

The recipients of a basic income were selected through random sampling among those who in November 2016 received an unemployment benefit from Kela. The control group consisted of those who in November 2016 received an unemployment benefit from Kela but were not selected for the experiment.

Data that can be used when reshaping the social security system

The evaluation study of the basic income experiment generates data that can be used when reshaping the social security system. The results will be published in stages during 2019 and 2020, and the following results will be ready in April 2019. The evaluation also includes an interview study, which will be carried out in spring 2019.

Kela is responsible for the evaluation study, and Kela carries out the evaluation together with the VATT Institute for Economic Research, the Labour Institute for Economic Research, the University of Turku, the University of Helsinki, the Finnish Central Association for Mental Health and the Think-tank Tänk.

‘Reliable evaluations of the effects of the experiment will be available when all the materials gathered have been analysed while taking into account the parameters that constituted a framework for the experiment. After that we can evaluate the possible effects of an introduction of a basic income in Finland’, says Olli Kangas, scientific director of the research project and Professor of Practice at the University of Turku.

Exceptional experiment

The basic income experiment was an exceptional social experiment both domestically 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.

In the experiment, 2,000 randomly selected unemployed persons were paid a monthly tax-exempt basic income of 560 euros regardless of any other income they may have had or whether they were actively looking for work. The experiment was begun on 1 January 2017 and ended on 31 December 2018.

‘The lessons learned while planning and implementing the experiment provide a solid base for the planning of new ambitious social experiments - for instance of a negative income tax’, says Olli Kangas.

The experiment was launched by the Government of Prime Minister Juha Sipilä. The aim was to study how it would be possible to reshape the Finnish social security system so that it better corresponds to changes in working life. The experiment was implemented by Kela, the Social Insurance Institution of Finland.

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