Removing Welfare Traps: Employment Responses in the Finnish Basic Income Experiment

Jouko Verho, Kari Hämäläinen and Ohto Kanninen

No 142, Working Papers from VATT Institute for Economic Research

Abstract: This paper provides evidence that replacing minimum unemployment benefits with a basic income of equal size has minor employment effects at best. We examine an experiment in Finland in which 2,000 benefit recipients were randomized to receive a monthly basic income. The experiment lowered participation tax rates by 23pp for full-time employment. Despite the considerable increase in work incentives, days in employment remained statistically unchanged in the first year of the experiment. Moreover, even though all job search requirements were waived, participation in reemployment services remained high.

Keywords: Employment; Field experiment; Social insurance; Unemployment benefits; Social security; taxation and inequality; Labour markets and education; C93; H55; I38; J65; Sosiaaliturva; Työmarkkinat (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-exp, nep-ias and nep-pbe
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Citations: View citations in EconPapers (2)

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https://www.doria.fi/handle/10024/180639

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Journal Article: Removing Welfare Traps: Employment Responses in the Finnish Basic Income Experiment (2022)
Working Paper: Removing Welfare Traps: Employment Responses in the Finnish Basic Income Experiment (2021)
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