Experimenting with basic income in finland

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Olli Kangas of Kela explains how Finland plans to experiment with basic income.

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Experimenting with basic income in finland

  1. 1. Experimenting Basic Income in Finland Olli Kangas (olli.kangas@kela.fi) Professor, Research Director Kela, Social Insurance Institution of Finland
  2. 2. A Governmental Mandate • Prime Minister Juha Sipilä’s governmental program includes a number of social experiments • The basic income experiment is one of them • The aim is to reform the existing social policy to better match with societal changes, abolish work disincentives and diminish bureaucracy. • In an open bid the Kela-led research consortium consisting of • the VATT Institute for Economic Research and Social & kommunalhögskolan • Universities of Turku and Tampere, • think tank Tänk, • the Finnish Innovation Fund (SITRA), • Federation of Finnish Enterprises. • There are also experts representing municipalities and constitutional, social and tax legislation 2
  3. 3. Time table and funding • Time table for the consortium: • the first hearing 5. December 2015, • the interim report 30 March • the final report 15.11.2016. • The experiment will start in the beginning of 2017 and it will last 2 years • In 2019 results will be evaluated • The funding comes from the Government • € 20 bill for two years 3
  4. 4. There is a wide popular support for the basic income in Finland Support Wished for level € (median) • 2002 63% € 622 • 2015 69% € 1 000 • The wished for medians are 1.3 times the level of minimum pension • Support among voters for all political parties: • Left League 86%, Social Democrats 69%, Greens 75%, Centre 62%, True Finns 69%, Christian Democrats 56%, Swedish People’s Party 83%, Conservatives 54%. 4
  5. 5. Models to be explored and developed • The task for the working group is to consider: • Full basic income (BI) • The level of BI is high enough to replace almost all insurance-based benefits • Must be rather a high monthly sum • Partial basic income • Replaces all ’basic’ benefits but almost all insurance-based benefits left intact • Minimum level should not be lower than the present day minimum level of basic benefits (ca net € 550 a month) • Negative income tax • Income transfers via taxation system • Other models • Perhaps low BI plus ’participation’ income 5
  6. 6. Methods • Specification of models to be explored • Juridical aspects dealing with social legislation • Taxation • Juridical aspects dealing with constitution (equal treatment of residents and right to have social care and income protection) • Evaluating the costs by micro simulations • distribution of benefits and costs • Which options appear to be im/possible • Planning the experimental setting • Constitutional limitations: demand of equal treatment of all − Voluntariness -> selection bias − Two stage sampling among volunteers: Treatment and control group − Obligatory: − Local experiments to capture externalities6
  7. 7. Experimental settings (an 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 nation level randomization e.g., 10 000 cases • Include a county level experiments • A random sample of e.g., 10% of a county • local experiments in order to capture institutional and interaction effects and various externalities • e.g. as follows: local municipalities with 10%, 30% random sampling and perhaps 2 municipalities with 100% samples.7
  8. 8. The working group evaluates the models, research setting and samples to be experimented • The task for the working group is to make a plan for the experiment • After the first report (due to 30 March 2016) the Government decides which models should be further developed • Later in the year 2016 the Government will decide which model/s will be experimented, what is the target population and what is the experimental setting • the expert group is preparing suggestions for that decision 8