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

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 which 2,000 benefit recipients were randomized to receive monthly income. The lowered participation tax rates by 23 percentage points for full-time employment. Despite the considerable increase work incentives, days remained statistically unchanged first year experiment. Moreover, even though all job search requirements waived, reemployment services high. (JEL C93, H24, H53, I38, J64, J65)