Microeconomics

Income Support

Welfare

Engineering

Economics

Unemployment

Market economy

Work (physics)

Basic income

Economic growth

Macroeconomics

Labour economics

Randomized experiment

Demographic economics

Incentive

Pathology

Medicine

Mechanical engineering

American Economic Journal Economic Policy

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 23 percentage points 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. (JEL C93, H24, H53, I38, J64, J65)

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