Chapter 2: The Finnish social security system: Background to the Finnish basic income experiment
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The Finnish social protection system is quite comprehensive, which makes it complicated. As a result, the interaction between different schemes does not always work rationally. This chapter examines social policy schemes that produce various income and bureaucracy traps and disincentives. It focuses on the interplay between various income-tested benefits, such as housing allowances, and social assistance combined with progressive taxation. There have been multiple attempts to simplify the system, but the results have been poor. Not surprisingly, barriers to employment and measures aimed at increasing labour force participation have been the main areas of interest. Furthermore, some cash-for-care schemes create their own disincentives, particularly for women. In a sense, the Finnish basic income experiment was just one episode in a never-ending quest for getting the unemployed to work.