Learn$Ave: A Demonstration Project of Individual Development Accounts for Human Capital Acquisition in Canada

Background: It has been proposed that asset-based programs can be an effective tool to give people more control over their lives by supplying them with a source of empowerment and by fostering a more forward looking attitude. Assets would also increase individuals' ability to take risks and to make important decisions that can broaden their range of opportunities. Does encouraging low-income Canadians to save for education lead them to increase investment in their own human capital? This question is at the heart of learn$ave, a demonstration project to test whether the acquisition of assets among low-income families through the provision of targeted saving incentives can lead to higher investment in adult education and training.

Social and Enterprise Development Innovations (SEDI) implemented and delivered learn$ave with a network of community non-profit agencies in ten sites across Canada. Under learn$ave, participants received $3 in matched credits for every $1 that they saved in an individual development account (IDA). Participants had up to three years to save a maximum of $1,500. With the matching contribution, the maximum amount available to the participant at the end of this saving period was $6,000. The matched funds could be used for skills acquisition, through training, education, or small business start-ups. Like other IDA programs, learn$ave also provided assistance to participants in the form of financial management training.

Methods: The Social Research and Demonstration Corporation, a Canadian non-profit research organization specializing in the evaluation of large scale social experiments, oversaw the research design and evaluation process to measure the impact learn$ave had on participants' savings, education, and business start-up. Three of the learn$ave sites, Vancouver, Ottawa and Halifax, participated in an evaluation of the intervention using a randomized experimental design. Applicants at these sites (n=3,584) were randomly assigned to one of three research groups: a “learn$ave-only” program group, receiving only matched credits; a “learn$ave-plus” program group, receiving the matched credits plus financial management training and enhanced case management services; and a control group.

The longitudinal study collected data through telephone surveys at baseline and three follow-up waves over five years. Additional data on savings and withdrawal activity comes from the Participant Management Information System. Analysis was conducted using regression adjustment models for each outcome variable.

Results: Final results show that the matched saving credits led to positive impacts on budgeting and saving incidence, without undue hardship on participants. Most importantly, the intervention was successful in encouraging additional adult learning among program participants, mainly in post-secondary education programs. The addition of financial management training did not lead to very compelling results, adding very little to the main impact of the matched savings grant.

Conclusions: The learn$ave intervention increased both the enrollment in educational programs and the quality of programs selected by low-income adult Canadians. This finding has significant implications for policies that aim to increase human capital and financial opportunities for low-income populations. The findings also inform practice, providing evidence that low-income families can benefit from matched savings programs.