Small trial of paperless unemployment pay in Finland

[john101]

I thank you evo for contnuing to bring things back on track. I think I got it now. It's not the UBI that various sources mix up in reporting this trial. What Finland is doing in this trial is actually not such a new idea. Back in the 70's the dole in Australia was administered similarly. I believe Sweden also has done it in a similar way. In Australia the benefits have gone through a lot of changes, basically a big drift away from the 70's model. This time in Finland it is a deliberate study so it can be followed. It'll be interesting to see how it goes.

 

[vela]

So they are SUBTRACTING the $587 from their existing benefits and paying it back to them, the only difference is that the recipients do not have to jump through the legal hoops they normally would.

An important difference is that the recipients won't lose this income even if they get a job. Under the regular system, getting a job could cause a person to lose more in unemployment benefits than what they earned, leaving them worse off as a result of working.

 

[russ_watters]

...$587/mo AND is deducted from the benefits that they are ALREADY receiving, so there is no cost to the government at all...

It's not costing Finland a penny and actually saving them money due to the decreased human resources needed to monitor and process unemployment paperwork.

I don't think that's completely true. There are two parts to the difference between the UBI and unemployment. One is the lack of requirement to be looking for a job (and associated admin overhead), but the other is that if you find a job, you still get the money. So presumably it would cost a little bit of money to fund extra benefits for people in the study who find jobs.

Also, the administrative overhead won't really go down for the study because the study itself is added administrative overhead. But that's really an aside; it would still enable measurement of how much a real UBI would save in admin overhead.

If the goal of the study (I'd really like to see the actual proposal...) is just to see if more unemployed find jobs under the UBI than with normal unemployment admin requirements, I guess that's a useful thing to know, but it is a very limited part of what a UBI is about. In particular, as far as I know, no one has ever tested the UBI by forcing a group of people to pay extra taxes and then monitoring how that affects them.

 

[russ_watters]

Also, the administrative overhead won't really go down for the study because the study itself is added administrative overhead. But that's really an aside; it would still enable calculation of how much a real UBI would save in admin overhead.

Erp, actually, I'm not sure if that is really true or not either! Since presumably the people are still receiving part of their normal unemployment benefits, at least part of the administrative overhead would still be needed.

 

[OmCheeto]

...
Does NO ONE read what I post?

REALLY?

NO ONE?

Well, not until you yell at me...
But I was interested in the economic impact, just in case your assertion that this experiment has no added costs was not true.
First off, I must say I don't fully understand the Finnish government structure. And this may be true of others as I've seen government budget numbers from between 11.5 and 54 billion euro.
Anyways, I added up what this experiment will cost: €13.44 million/year [maths: 2000 people * €560/(month*peeps) * 12 months/yr]
I compared this to the upper govt. figure: €54 billion/year
And what came up was a tiny little PERCENTAGE: 0.025% of budget
It's also apparently half of what the President of the Republic spends: €34 million/year [ref]

Conclusion: Presidents are expensive.

 

[StatGuy2000]

Based on the news link provided by the OP, the program that is about to be implemented by Finnish government sounds similar to the Mincome program that was set up by the province of Manitoba in Canada back in the 1970s. The details of the program can be found in the following Wikipedia article.

https://en.wikipedia.org/wiki/Mincome

The Wikipedia article also summarizes some of the research of the post-Mincome data. The summary is that the labour supply responses were generally small, with working hours dropping about 1% for men, 3% for married women, and 5% for unmarried women, with only working mothers and teenagers working substantially less. Some of the results of further analysis by University of Manitoba Evelyn Forget found that the period that Mincome was administered, hospital visits dropped 8.5% (with fewer instances of workplace injuries and fewer ER visits from injuries and accidents), reduction of psychiatric hospitalization and the number of mental health-related consultations (see links in the Wikipedia article).

My personal take is that, at least initially, there seems to be benefits to having a guaranteed universal basic income to mitigate the effects of poverty (with the emphasis to the word "seems"). However, given the relatively short duration of the program of Mincome, and the fact that the program was implemented in a relatively rural area of Canada, it is difficult to make any real conclusions on the effectiveness of such programs.

I would be interested to see what both the short-term and long-term impacts of the program being implemented in Finland over the coming years -- could be fertile grounds for research by economists, sociologists, and others.

 

[OmCheeto]

Interesting interview with one of the advocates:

Finland: Interview with Tapani Karvinen, from the Pirate party
Jan 5, 2017 Toru Yamamori

...
Q: Have you talked about UBI with your family and old friends? What do they say?

A: My parents have both owned small business and they do understand how UBI would make their lives less stressful, especially in those silent months, when income is not guaranteed.
...​

There is of course more to the interview, but I thought that was a good point, which I hadn't thought about.

Also, some background from the Finnish government, without all the media embellishment:

Ministry of Social Affairs and Health requests opinions on a basic income experiment
25.8.2016
...
In a nutshell
Basic income experiment in 2017–2018

• Goal: To obtain information on the effects of basic income on the employment of persons participating in the experiment, and to survey other impacts of basic income.
• Level of basic income: EUR 560 €/month, tax free benefit. According to calculations, this should produce an adequate incentive effect encouraging to accept temporary and part-time work.
• Target group: Persons between 25 and 58 years of age living in Finland who in November 2016 receive basic daily allowance or labour market support under the Unemployment Security Act.

...​

That was from August, so some things may have changed.