Experimenting with basic income in finland

Government & Nonprofit

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PowerPoint-esitys Experimenting Basic Income in Finland Olli Kangas (olli.kangas@kela.fi) Professor, Research Director Kela, Social Insurance Institution of Finland 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 2 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 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 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 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 externalities 6 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 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