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

1. Experimenting Basic Income in
Finland
Olli Kangas (olli.kangas@kela.fi)
Professor, Research Director
Kela, Social Insurance Institution of Finland

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
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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
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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%.
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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
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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. 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. 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
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