Tuesday. 28.11.2023

They had similar possibilities of finding work than the rest of the country's population, but a better feeling of wellbeing, health and trust in other people and in the institutions of society. This is how participants felt during the two-year basic income experiment conducted in Finland in 2017-2018, according to the final evaluation study published on 6 May by the Finnish Ministry of Social Affairs and Health.

This was the world’s first experiment of its kind that was nationwide, statutory and based on a randomised field experiment. Participation was not voluntary, which according to the Government means that it is possible to draw more reliable conclusions of the effects than in other experiments based on voluntary participation.

In the Finnish basic income experiment, 2,000 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.

Recipients were selected through random sampling among those who in November 2016 received an unemployment benefit from the Social Security (Kela). The control group consisted of those who in November 2016 received an unemployment benefit from Kela but were not selected for the experiment. 

The experiment started on 1 January 2017 and ended on 31 December 2018. The aim was to study how it would be possible to reshape the Finnish social security system so that it better meets the challenges posed by changes in working life.

Limited effects on employment

According to the Ministry of Social Affairs and Health, the employment effects of the basic income experiment were measured for the period from November 2017 to October 2018. In this period, the employment rate for basic income recipients improved slightly more than for the control group. During the reference period, the basic income increased the number of days of employment by 6 days and the basic income recipients were employed for 78 days on average.

However, Finnish Government points out that the interpretation of the effects of the experiment is made more complicated by the introduction of the activation model at the beginning of 2018, which meant more stringent criteria for unemployment benefits asymmetrically in both groups.

"The effects of the second year of the experiment cannot be separated from the effects of the activation model," says Kari Hämäläinen, Chief Researcher at the VATT Institute for Economic Research.

During the first year of the experiment, when the activation model had not yet been introduced, the basic income did not have any employment effects for the basic income recipients at group level.

However, the basic income seems to have had slightly different effects on different groups: for instance for families with children who received a basic income, employment rates improved during both years of the experiment. The results for different groups are still uncertain due to the small number of observations and the numerous tests. 

"All in all, the employment effects were small. This indicates that for some persons who receive unemployment benefits from Kela the problems related to finding employment are not related to bureaucracy or to financial incentives," says Hämäläinen.

Better mental health and wellbeing

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

Survey respondents who received a basic income described their wellbeing more positively than respondents in the control group. They were more satisfied with their lives and experienced less mental strain, depression, sadness and loneliness.

They also had a more positive perception of their cognitive abilities, for example memory, learning and ability to concentrate.

"In addition, the respondents who received a basic income had a more positive perception of their income and economic wellbeing than the control group. They were more likely to find that their financial situation is manageable and that they are protected financially," says Minna Ylikännö, Head of the Research Team at Kela.

The basic income recipients trusted other people and the institutions in society to a larger extent and were more confident in their own future and their ability to influence things than the control group. This may be due to the basic income being unconditional, which in previous studies has been seen to increase people’s trust in the system.

"On the basis of the study, it is not possible to say with certainty that the better wellbeing of the test group was due specifically to receipt of a basic income. Then again, regional and local basic income experiments in other countries have also shown similar results of improved wellbeing," says Ylikännö. 

The response rate for the survey was 23% (31% for the basic income recipients and 20% for the control group), which is typical for surveys.

Basic income did not raise employment but improved wellbeing