Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

Basic income: Finland’s final verdict

Philippe van Parijs 7th May 2020

The coronavirus crisis has renewed interest in the notion of a universal basic income. The full report of a two-year Finnish experiment has just appeared.

basic income
Philippe Van Parijs

On January 1st 2017, Finland began the most careful experiment with basic income undertaken in a developed country. Two thousand long-term unemployed, aged between 25 and 58—at the time recipients of the means-tested, minimum-income benefit of €560 a month—were randomly selected. For two years, they were given that same amount unconditionally—irrespective of with whom they were living, how much they were earning and whether they were actively looking for a job.

The experiment terminated, as planned, on December 31st 2018. As the researchers wanted to observe their subjects as unobtrusively as possible, they announced that they would publish the final report only after all relevant administrative data could be collected and analysed. This report was published on May 6th.

Key question

One key question the experiment aimed to answer was whether the unconditional character of the benefit would boost or depress beneficiaries’ participation in the labour market. Would it enhance that, as a result of the benefit not being reduced or lost when starting a job? Or would it lessen participation, as a result of the beneficiaries no longer being forced to keep looking for a job or accept a job when one became available?

In the first year of the experiment, as documented in a preliminary report published last year, the difference in working days—those in which at least €23 was earned through a wage or self-employment—with respect to the control group was slightly positive, but not statistically significant. Some feared, however, that the whole relevance of the experiment would be shattered, as a result of a major social-policy reform which entered into force precisely at the beginning of the second year.

On January 1st 2018, the right-of-centre Finnish government introduced the so-called ‘activation model’, a general reform of the means-tested benefit schemes which made them more constraining: if benefit recipients failed to work a sufficient number of hours or follow suitable training in each quarter, their benefits were to be cut by about 5 per cent.

This reform, undone since by Finland’s current government, was in force throughout the second year of the experiment and applied, at the beginning of the year, to about two thirds of the control group. It also applied to slightly less than half the members of the experimental group, because they could claim, on top of their basic income, means-tested child benefits of some €150-300 according to the number of their dependent children, and means-tested housing benefits up to €600 or more according to their place of residence.



Don't miss out on cutting-edge thinking.


Join tens of thousands of informed readers and stay ahead with our insightful content. It's free.



Employment went up in both groups from the first to the second year. How much was due to the ‘activation model’ is impossible to say, since no randomised experiment was conducted. However, whether large or small, this effect was necessarily more significant in the control group than among basic-income recipients, as fewer of the latter were concerned by the tightening of the conditionality.

The question then becomes: did the implementation of this activation model, with its stronger grip on the control than on the experimental group, reverse the basic income recipients’ slight advantage in terms of labour-market participation during the first year? It did not. On the contrary, the gap widened considerably and became statistically significant: in the second year, basic-income recipients worked on average six more days per year than individuals in the control group. And had the activation reform not taken place, one can safely conjecture that this differential would have been even greater.

Structural effect

Does this suffice to show an unconditional basic income is a good idea? Of course not. It hardly even contributes to showing that an unconditional basic income, introduced at that level within Finland’s current framework, would be economically sustainable.

No randomised experiment can help us with that question without including in the sample people who are currently at work and who would be enabled—as intended—to reduce their working time or take a break, thanks to the basic income. Nor can we answer the question without taking into account the implications a generalised basic income would need to have for tax profiles, none of which was simulated in the experiment.

Most importantly, the long-term sustainability of a generous unconditional basic income hinges far less on the immediate impact on labour supply than on the structural effect on health, skills and motivation that can be expected from a smoother lifelong back-and-forth between employment, education and voluntary activities.

By showing a significant positive impact on employment, the experiment did not prove the economic sustainability of a basic income of €560, conditionally supplemented in the various ways mentioned above. Nor was it supposed to do so. But it did yield interesting results which will stimulate further thinking about how best to phase in a basic income and what accompanying measures would facilitate the transition.

One striking result, for example, concerns the quarter of the subjects with a native language other than Finnish or Swedish. In this category, consisting mostly of recent immigrants, basic-income recipients worked on average 13 days more than the corresponding control group, whereas the difference was only 3.6 days for the others.

Also significant is that the positive effect was less in Helsinki (1.8 more days of employment) than in rural municipalities (7.8 more days), where means-tested housing benefits are less frequent and lower and therefore the remaining unemployment trap is less deep. By contrast, despite the availability of means-tested child benefits, the positive effect of the basic-income regime was higher in households with children (13.7 more days) and for single parents (9.5 days) than in childless households (1.6 more days).

Subjective perceptions

No less interesting are the results based on a survey conducted at the end of the second year with members of the experimental and the control groups. These results were already recorded in the preliminary report and have been refined in the light of in-depth interviews. A statistically significant difference in favour of basic-income recipients emerged in their subjective perceptions of health and stress and their trust in other people and institutions.

Making access to the formal labour market easier for the excluded is an important purpose of a basic-income reform. But it is by no means the only one. Its far broader aim is to make our economy more resilient and our society more just, by increasing the economic security and freedom of choice of those with least of those.

Four years ago, Switzerland courageously organised a national referendum on a very bold basic-income proposal. A few months later, Finland started a carefully designed, real-life experiment with a far more modest version. Whatever its limitations, this experiment provides food for thought and action to all those who believe basic income is the way to go.

And with the pandemic shattering the economic security of many around the world, there are more of them than ever before. Thank you, Finland!

Philippe van Parijs
Philippe van Parijs

Philippe van Parijs is Professor Emeritus at the University of Louvain (Hoover Chair of Economic and Social Ethics) and special Guest Professor at the University of Leuven.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u4219834dafae1dc3 2 EU’s New Fiscal Rules: Balancing Budgets with Green and Digital AmbitionsPhilipp Heimberger
u42198346d1f0048 1 The Dangerous Metaphor of Unemployment “Scarring”Tom Boland and Ray Griffin
u4219834675 4ff1 998a 404323c89144 1 Why Progressive Governments Keep Failing — And How to Finally Win Back VotersMariana Mazzucato
u42198346ec 111f 473a 80ad b5d0688fffe9 1 A Transatlantic Reckoning: Why Europe Needs a New Pact Beyond Defence SpendingChristophe Sente
u4219834671f 3 Trade Unions Resist EU Bid to Weaken Corporate Sustainability LawsSocial Europe

Most Popular Articles

u4219834647f 0894ae7ca865 3 Europe’s Businesses Face a Quiet Takeover as US Investors CapitaliseTej Gonza and Timothée Duverger
u4219834674930082ba55 0 Portugal’s Political Earthquake: Centrist Grip Crumbles, Right AscendsEmanuel Ferreira
u421983467e58be8 81f2 4326 80f2 d452cfe9031e 1 “The Universities Are the Enemy”: Why Europe Must Act NowBartosz Rydliński
u42198346761805ea24 2 Trump’s ‘Golden Era’ Fades as European Allies Face Harsh New RealityFerenc Németh and Peter Kreko
startupsgovernment e1744799195663 Governments Are Not StartupsMariana Mazzucato
u421986cbef 2549 4e0c b6c4 b5bb01362b52 0 American SuicideJoschka Fischer
u42198346769d6584 1580 41fe 8c7d 3b9398aa5ec5 1 Why Trump Keeps Winning: The Truth No One AdmitsBo Rothstein
u421983467 a350a084 b098 4970 9834 739dc11b73a5 1 America Is About to Become the Next BrexitJ Bradford DeLong
u4219834676ba1b3a2 b4e1 4c79 960b 6770c60533fa 1 The End of the ‘West’ and Europe’s FutureGuillaume Duval
u421983462e c2ec 4dd2 90a4 b9cfb6856465 1 The Transatlantic Alliance Is Dying—What Comes Next for Europe?Frank Hoffer

Foundation for European Progressive Studies Advertisement

Spring Issues

The Summer issue of The Progressive Post is out!


It is time to take action and to forge a path towards a Socialist renewal.


European Socialists struggle to balance their responsibilities with the need to take bold positions and actions in the face of many major crises, while far-right political parties are increasingly gaining ground. Against this background, we offer European progressive forces food for thought on projecting themselves into the future.


Among this issue’s highlights, we discuss the transformative power of European Social Democracy, examine the far right’s efforts to redesign education systems to serve its own political agenda and highlight the growing threat of anti-gender movements to LGBTIQ+ rights – among other pressing topics.

READ THE MAGAZINE

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

With a comprehensive set of relevant indicators, presented in 85 graphs and tables, the 2025 Benchmarking Working Europe report examines how EU policies can reconcile economic, social and environmental goals to ensure long-term competitiveness. Considered a key reference, this publication is an invaluable resource for supporting European social dialogue.

DOWNLOAD HERE

Eurofound advertisement

Ageing workforce
The evolution of working conditions in Europe

This episode of Eurofound Talks examines the evolving landscape of European working conditions, situated at the nexus of profound technological transformation.

Mary McCaughey speaks with Barbara Gerstenberger, Eurofound's Head of Unit for Working Life, who leverages insights from the 35-year history of the European Working Conditions Survey (EWCS).

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

BlueskyXWhatsApp