Proponents of universal basic income claim that it could streamline current programs aimed at supporting the unemployed, removing perverse tax incentives and bureaucratic barriers that discourage work without reducing benefits to welfare recipients.

But in a paper in the American Economic Journal: Economic Policy, authors Jouko Verho, Kari Hämäläinen, and Ohto Kanninen provide evidence that guaranteed basic income has only a limited impact on long-term unemployment in advanced countries, despite large increases in employment incentives.

The authors examined an experiment in Finland in which 2,000 unemployment benefit recipients were randomized to receive a monthly basic income. Between 2017 and 2018, the government replaced the minimum unemployment benefits of participants with an equally generous monthly guaranteed income of €560 ($631). At the same time, the program removed administrative barriers, such as job search requirements.

Figure 2 from their paper shows the impact on long-term employment. The top panel indicates the share of participants who had days of employment, by month, for the treatment and control groups. The lower panel shows the difference between the two groups.

Figure 2 from Verho et al. (2022)