The Impact of the Hope Growing Account Program on the Participants' Economic Well-Being in South Korea

Background and purpose:  Asset-based social policies and programs are in a period of emergence and testing throughout Asia. The Korea government recognized the limitations of the income-based policy, namely as people struggle to exit poverty. As a new initiative, in 2010, the Korean government introduced the Hope Growing Account (Hope) program. Hope combines elements of its social assistance scheme (monthly income grant) with matched funds for saving to encourage the working poor to increase income and build assets. Hope is available to working households receiving the welfare benefits. The program grew quickly: the number of participants increased from 10,000 in 2010 to 32,000 households in 2014. Asset building policies normally aim to promote saving and asset accumulation. Additionally, many stakeholders are also interested in addressing the question: To what extent does the Hope program impact participants’ economic well-being?

Methods:  This longitudinal study estimated changes in household economic well-being among 895 low-income households who participated in Hope between 2010 and 2012. Economic well-being was measured by changes in household monthly income and income-to-needs ratio. Data came from the Hope Panel Study and Korean Welfare Panel Study. This study used the propensity score matching (PSM) and difference-in-differences (DID) to remove internal validity threats. For matching two groups, we chose the socio-demographic characteristics of household and household heads as conditioning variables referring to empirical studies: household composition, region, housing tenure status, baseline earned income, gender, marital status, age, education, health status, and employment.

Results:  This study revealed three major findings: (a) the impact of Hope varied over household income distributions; (b) lower income households were more likely to increase their monthly earned income and income-to-needs ratio compared to demographically similar nonparticipants, while higher income households were less likely to increase their income and income-to-needs ratio; and (c) among the Hope participants, those who were single, resided in non-metropolitan areas, or had higher earned income in 2010 were less likely to increase their earned income and income-to-needs ratio two years after the program.

Conclusions and implications: These preliminary findings suggest that incentives provided in Hope helped some but not all participants increase earnings and improve their income poverty status. We describe how future research is needed to better understand how the Hope program impacts a household’s assets and behavioral changes in the long-run. To more effectively address poverty, the Hope program might consider lowering its income eligibility to allow for more low-income households joining the program. Furthermore, we suggest targeted and "just-in-time" case management to target other non-income aspects of social development.