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Kirjoita Tekstiä Napsauttamalla Tätä. from IDEA to EXPERIMENT - REPORT on UNIVERSAL BASIC INCOME EXPERIMENT in FINLAND Kirjoita Tekstiä Napsauttamalla Tätä

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Kirjoita Tekstiä Napsauttamalla Tätä. from IDEA to EXPERIMENT - REPORT on UNIVERSAL BASIC INCOME EXPERIMENT in FINLAND Kirjoita Tekstiä Napsauttamalla Tätä Kelan tutkimus Työpapereita 88 | 2015 Kirjoita tekstiä napsauttamalla tätä. FROM IDEA TO EXPERIMENT - REPORT ON UNIVERSAL BASIC INCOME EXPERIMENT IN FINLAND Kirjoita tekstiä napsauttamalla tätä. Kirjoittaja Kirjoittajan nimi, titteli, oppiarvo Työpaikka/taustataho etunimi.sukunimi@tyopaikka.fi © Kirjoittaja ja Kela www.kela.fi/tutkimus ISSN 2323-9239 Helsinki 2015 SISÄLTÖ Foreword 5 1. Summary and recommendations ..................................................................................................7 2. Background ...............................................................................................................................10 3. LEGAL CONSTRAINTS ...............................................................................................................14 3.1. Basic income models against the background of EU legislation .......................................18 4. EXPERIMENTAL DESIGN AND SAMPLE POPULATION .............................................................21 4.1. What should be assessed in the experiment? ...................................................................21 4.1.1. Basis for reliable assessment ................................................................................22 4.1.2. Randomisation helps in the construction of a credible control group ...................23 4.2. Regional experiments ........................................................................................................24 4.2.1. Regional experiments involving the entire target population .................................24 4.2.2. Experiments involving only part of the regional target population ........................25 4.3. Proposal for experimental design ......................................................................................26 4.3.1. Randomising participants ......................................................................................26 4.3.2. Obligatory nature of participation ..........................................................................27 4.3.3. Sampling unit 28 4.3.4. Target group 28 5. Sampling design – two-stage sampling ......................................................................................30 5.1. Groups taking part in the experiment ................................................................................31 5.1.1. Power calculations .................................................................................................33 5.2. Target population ...............................................................................................................34 5.2.1. Role of the budget allocated for the experiment ...................................................35 5.2.2. Employment effects against the background of earlier research .........................35 5.2.3. Target population ...................................................................................................36 5.2.4. Small-income households as target population ..................................................38 6. BASIC INCOME MODELS AND MICROSIMULATIONS ..............................................................42 6.1. Description of the calculation models................................................................................ 43 6.2. Full basic income ...............................................................................................................46 6.2.1. What is meant by full basic income? .....................................................................46 6.2.2. Full basic income in microsimulation .....................................................................47 6.2.3. Full basic income: summary ..................................................................................52 6.3. Partial basic income ...........................................................................................................53 6.3.1. What is meant by partial basic income? ................................................................53 6.3.2. Wage earner living alone - current model and basic income of 550 and 750 euros . 55 6.3.3. Single parent: current model and basic income of 550 and 750 euros .................62 6.3.4. Two-adult households ...........................................................................................66 6.3.5. Assessing partial basic income .............................................................................68 6.4. Negative income tax ..........................................................................................................69 6.4.1. Negative income tax in microsimulations ..............................................................71 6.4.2. Assessing negative income tax .............................................................................73 6.5. Budgetary and income distribution effects of partial basic income and negative income tax 74 6.6. Other basic income models ...............................................................................................75 6.6.1. Participation income/participatory social security .................................................76 6.6.2. Alternative models – Universal Credit/active welfare ............................................78 6.6.3. Options – basic account .......................................................................................81 6.6.4. Changes in housing allowance: “housing grant” ...................................................82 7. PLATFORM FOR BASIC INCOME EXPERIMENT .......................................................................85 7.1. Using Kela as the payment platform ..................................................................................85 7.2. Basic income experiment and Finnish Tax Administration ................................................87 8. ASSESSMENT OF THE MODELS AND RECOMMENDATIONS.................................................. 89 %5! FOREWORD This report “From Idea to Experiment” is a preliminary report on the universal basic income exper- iment planned in Finland and its purpose is to provide an overview of the information available on basic income, make preliminary analyses and propose experimental models and designs. The struc- ture of the publication reflects a process that has lasted for five months. We began by specifying the concept and content of basic income. We collected information on experiments conducted and planned in other countries, debate on basic income in Finland and the support base for basic income in Finland. Extensive experiments such as the one with basic income involve constitutional consid- erations, which have been extensively reviewed with constitutional experts. Basic income as an en- tirely new form of benefit is still an unknown concept in the EU legislation. The central question is how basic income fits into the EU legislation and other international legislation. Basic income is not only interesting from the Finnish perspective but it also sets a precedent at EU level. The “empirical” data presented in the publication consists of a microsimulation. Microsimulation can be used for changing legislation and the effects of the changed legislation can be illustrated by using cases as examples, while on the other hand effects on the national economy can be assessed by applying the new model to income distribution data. The calculations present examples of the composition of income in different types of household in the existing system of current transfers and in the basic income options. The calculations detail “easy” cases (people living alone who ac- count for a majority of Finnish households) and “difficult” cases where incentive problems accumu- late generating high effective marginal tax rates and high participation tax rates. In “difficult” cases the increase in earned income is not reflected in higher net income. In the calculations provided as examples, the main attention is on unemployed people and part-time workers living in rental flats in whose case the current social security system in often seen as inadequate. The proposal first presents a model with full basic income, followed by partial basic income, nega- tive income tax and other basic income options. For reasons of presentation and space, our focus is on two levels of basic income: basic income of 550 euros and 750 euros. The lower level has been selected as a basis for the calculations because 550 euros roughly corresponds to the monthly net level of many of the basic social security benefits provided by Kela. At the same time, the higher level has been selected for comparison so that the incentive effects of different levels of basic in- come compared with the existing system of current transfers could be illustrated. We have also made preliminary calculations using basic income between 450 and 1,500 euros (in a model based on full basic income). In principle, modellings and sensitivity analyses could be made at any level of basic income. However, the current level of basic social security sets legal constraints, while on the other hand, the cost of the model provides practical obstacles concerning the model to be tested. A summary is presented in the last section. %6! In retrospect, one can only conclude that the assignment was much more extensive, difficult and complicated than we could have imagined at the start of the work. Answering one question opened a large number of new questions. We found answers to some of the questions, while other questions remained unanswered. This means that there is a need for further studies. We were
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