Finland’s Basic Income Experiment Kind of Works, but Not in Employment Terms
Finland has begun reporting on its two-year experiment with the so-called basic income—guaranteed monthly cash for citizens. So how did it work out? The results so far are mixed.
The program involved a couple of thousand unemployed Finns between the ages of 25 and 58, who got €560 ($634) a month through 2017 and 2018 instead of basic unemployment benefits. The second year’s results will be reported in 2020, but as for the first year, it seems the basic income made the subjects feel healthier and less stressed.
However, it didn’t have any meaningful effect on the subjects’ employment—compared with a control group, the participants worked an average of 0.4 days more during 2017, and earned an average of €21 ($24) less over the same year.
That’s a problem, because one of the main points of the experiment was to see if a social security system that used a basic income would give people more incentives to find work than the traditional system.
“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 labor market,” said Ohto Kanninen, a research coordinator at Finland’s Labour Institute for Economic Research, in a Friday statement.
Which is not to say that the experiment entirely failed on this front. Along with feeling healthier and less stressed, the recipients of the basic income said they felt more confident about their futures and their ability to find employment, said the Finnish Social Insurance Institution (Kela,) which ran the experiment. The subjects also felt that the system for claiming benefits was less bureaucratic under the experimental system.
“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,” said Kela lead researcher Minna Ylikännö.
Again, this report only covers half the experiment, so those looking for results to spur or dissuade further basic-income plans should stay tuned. Other basic income experiments are taking place in countries such as Canada, Scotland and Kenya.
The idea of the basic income has attracted support from across the ideological spectrum—fans have included the socialist Martin Luther King and the extremely un-socialist Friedrich Hayek and Milton Friedman. It’s currently enjoying a revival as policy-makers and Silicon Valley grandees try to cut the cost of social welfare systems and/or figure out how to handle the likely effects of automation on employment.