Benefit take up in the finnish basic income experiment

Benefit take up in the finnish basic income experiment

• 1.
  Benefit take-up inthe Finnish Basic Income Experiment Miska Simanainen Social Insurance Institution Research Unit 17/12/2021
• 2.
  Background • Finland conducteda field experiment with a basic income policy in 2017- 2018 • The primary aim was to study the effects of introducing a basic income on employment • The list of secondary outcomes included the use of existing other social benefits
• 3.
  Contents • Summarize theexperiment and its main results • Describe how the experiment affected the take-up of other social benefits • Payments (unemployment benefits, housing support, social assistance) • Contacts to benefit officials • Subjective experiences of benefit claiming
• 4.
  Sources of information •A register-based evaluation study on employment by Hämäläinen, Kanninen, Simanainen, Verho • Verho et al. 2021 • A survey-based study on subjective wellbeing by Kangas et al. • Kangas et al. (Eds.) 2021 • An ongoing further research project (VATT and Kela) on secondary outcomes by Hämäläinen, Simanainen, Verho
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  The experiment and itsmain results
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  The Finnish benefitsystem • Primary benefits provide income for the unemployed and those outside labour force • Earnings-related unemployment benefits, basic unemployment benefits paid by the Social Insurance Institution (basic allowance, labour market subsidy) • Earnings-related and basic daily allowances for parental leaves, sick leaves and rehabilitation • Earnings-related and basic pensions, student benefits etc. • Earnings may decrease the amount, e.g., in case of unemployment benefits for part-time workers, the tapering rate is 50% • Housing allowances provide support for the low income households to cope with housing costs • General housing allowance, housing allowance for pensioners • In housing allowance, earnings and primary benefits over the basic level decrease the allowance with a tapering rate of 34% • Social assistance provides monetary support in the case the household cannot meet the basic costs of living • Basic social assistance paid by the Social Insurance Institution since 2017 • Additional and preventive social assistance paid by the municipalities • Most incomes decrease the amount of social assistance with a tapering rate of 100%
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  The Finnish BasicIncome Experiment • Targeted to 25-58 year old basic unemployment benefit recipients (Nov 2016), N=175,000 • 2,000 persons were randomly chosen from the target population to receive a basic income for two years (2017-2018) • The rest of the persons in the target population formed the control group, N=173,000
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  The basic incomepolicy • An unconditional cash transfer of 560 euros was paid monthly • No requirement to work, search for jobs or participate in employment measures • Paid regularly and in advance (the second banking day of a month) • No income-testing or means-testing, no adjustments to earnings • Some statuses prevented the payment (e.g., imprisonment, moving abroad, some benefits like pensions) • The participants were able apply for other social benefits • Basic income was deducted fully from primary benefits • Basic income was taken as a benefit income in general housing allowance and basic social assistance
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  The treatment groupin 2016, on average • 24 days in employment • 268 days on unemployment benefits • 1,900 euros of earnings • 87 % on labour market subsidy, 13 % on basic unemployment allowance • 40 % singles, 18 % couples, 27 % couples with children, 16 % adults with children
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  Some relevant findingsfrom the main evaluation study to consider here • No employment effect during the first year (Hämäläinen et al. 2019) • A small increase (6 days) compared to controls in 2018 (Hämäläinen et al. 2020) • The experiment resulted in higher incomes compared to controls (Verho et al. 2021) • The average yearly income was increased by 12-14 % during the years 2017-2018 • The total monthly income of the treatment group was on average 209 euros and 166 euros higher than in the control group in 2017 and 2018
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  Benefit take-up during the experiment
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  Basic unemployment benefits There isa flow of persons from unemployment benefit schemes to employment and outside labor force. The share of persons receiving unemployment benefits decreases faster among the basic income recipients. Considering the null result on employment, there is potential non-take-up of unemployment benefits during the experiment.
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  Having vs. nothaving additional parts in UEB The difference in take-up between treated and controls was smaller for those with additional benefit parts than for those without additional benefit parts.
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  General housing allowance The shareof persons in households receiving general housing allowance is unaffected during the first year. There is a slight decrease in the take-up during the second year which is consistent with the increase in incomes. But what explains the first year? Reviewing practices?
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  Basic social assistance Thedifference in the take-up of social assistance between the groups is likely reflecting the increase of income caused by the experiment. The difference is largest in Jan 2017 when the participants received both unemployment benefits for Dec 2016 and a basic income for Jan 2017. In Jan 2019, the situation is the opposite.
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  Contacts There are morecontacting persons in the treatment group in the beginning and in the end of the experiment than in the control group. However, there are slightly less contacting persons in the treatment group during the second year which is consistent with the observed differences in benefit take-up.
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  Bureaucracy of claiming benefits Basicincome N=586 Control N=1047 P=0.011 Yes 57 % 64 % No 36 % 31 % Not sure 7 % 5 % A survey study was conducted during the second year of the experiment The questionnaire included a question on claiming benefits: Q: When you think about the past two years, do you feel that there is too much bureaucracy involved when claiming social security benefits? A: Yes, No, Not sure
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  To summarize • Noeffect on days in employment in 2017 • A small increase in 2018 • A substantial but not total replacement of unemployment benefits • A substantial reduction in the take-up of basic social assistance, most likely due to higher incomes • Only a small (if any) decrease in the take-up of general housing allowance during the second year • The share of persons reporting excessive bureaucracy in benefit claiming smaller in the treatment group than in the control • Differences in benefit take-up vanish after the experiment ends
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  Thank you! • Verhoet al. 2021. Removing Welfare Traps: Employment Responses in the Finnish Basic Income Experiment. • https://urn.fi/URN:ISBN:978-952-274-275-9 • Kangas et al. (Eds.) 2021. Experimenting with Unconditional Basic Income. Lessons from the Finnish BI Experiment 2017-2018. • https://doi.org/10.4337/9781839104855 • New topics covered in the further research project (Vatt & Kela), e.g., • Health and use of health services • Income poverty • Other social and labor outcomes
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  Miska Simanainen Researcher Social InsuranceInstitution Research Unit