Abstract
This study examines whether access to Individual Development Accounts (IDAs) promotes low-income individuals’ saving. IDAs are an asset-building policy that provides matching funds to participants’ savings for long-term economic development. This study uses survey data collected from a probability sample of Self-Sufficiency Program (SSP) participants (N=1,020) in Korea. SSP participants are automatically eligible for the IDAs program. The dependent variable is savings outcome: no savings, savings only in IDAs, savings only in private accounts, and savings in both IDAs and private accounts. The main independent variable is the length of SSP participation, which is equal to the duration for which SSP participants are qualified for IDAs. Multinomial logit regression shows that long-term SSP participants were significantly more likely to save only in IDAs or to save in both types of accounts than short-term participants with comparable characteristics. The predicted probability of “no savings” declined from 63% in the first year in SSP to 35% in the fifth year. The predicted probability of “IDAs savings only” increased from 13% to 43% for the same period. These results indicate that access to IDAs is effective in helping SSP participants save, calling for continued government support for this asset-building policy for low-income populations.