Learn$ave individual development accounts project: final report

• Description of the programme
• The study
• What are the outcomes?
• Key findings
• Points to consider
• Full report

Description of the programme

The learn$ave programme was established in 2000 by Human Resources Development and Skills Development Canada (HRSDC) to test the effectiveness of Individual Development Accounts (IDAs) in promoting adult learning among low-income Canadians and to address financial barriers to higher education.

IDAs are means-tested programmes that offer restricted savings accounts (with upper limits) with matching credits. The programme was delivered in 10 communities across seven Canadian provinces, with data available for 4,802 individuals.

The context for the programme is as follows:

• Median annual earnings for Canadians with a high school diploma are lower than those with a degree. Few adult Canadians return to school to upgrade their education after entering the workforce. ·A trend towards greater use of assisted savings in Canadian public policy, aimed at encouraging individual savings. There have been a range of approaches to encourage higher education and learning (documented in the paper) but none has yet tried to use a matched savings instrument to increase participation in training and education among adults.

The study

This is the final report. Information is also available in interim evaluations. Three trial sites used an experimental design, with participants randomly assigned as follows:

• 1,195 in a learn$ave-only group receiving financial incentives (matched saving credits)
• 1,193 in a learn$ave-plus group receiving financial incentives, financial management and enhanced case management as well as matched savings credits.
• 1,195 in the control group.

The research questions for each phase of the programme included:

Phase 1 Entering learn$ave:

• Will the offer of a savings incentive for education or small business start-up attract large numbers of low-income Canadians?
• Will participants have characteristics that distinguish them from the broader low-income population?

Phase 2 Accumulating learn$ave savings

• Will learn$ave participants’ attitudes to saving and education measurably change, and will the change be durable?
• Will learn$ave participants save more of their income than they would have saved without the incentive of the programme?
• Will the additional financial management training and enhanced case management services contribute to increase the impact of the matched saving credit on saving and related behaviour?

Phase 2 Accumulating learn$ave savings:

• Will learn$ave participants invest in more formal learning or in starting more small businesses by taking more courses or programmes than they would have?
• Can the programme attain its goals of increased human capital cost effectively?

Baseline and follow-up surveys of participants were the main sources of data for estimating impacts. Administrative data was used to assess cost-economy, efficiency and effectiveness. Qualitative case studies were conducted at each site.

What are the outcomes?

Financial behaviour: The study measured behaviours such as setting household budgets and financial goals, saving more of their income.

Other: The study measured whether participants invested in more formal learning or started more small businesses than others due to the programme.

Key findings

Process: Findings related to process are not summarised here.

Financial behaviour:

• learn$ave participants made use of offered accounts and financial incentives. Nearly all (93%) opened an account and most (64-69%) used matched credits. The average saving was $959 per participant, c.$320 a year.
• The additional services of financial management training and enhanced case management services had a significant but smaller incremental impact compared to the saving incentive alone. 3.3% more started savings accounts; 4.7% more used matched credits.
• learn$ave did not produce any significant increase in the net worth of programme participants.
• Throughout the study, matched credits, alone and in combination with services, modestly increased (3-12%) the percentage of participants who set financial goals.
• learn$ave participants saved more than the control group early on to earn matched credits, but later saved less than the control group when withdrawing their savings.

Other outcomes:

• The increased bank/learn$ave account balances and enhanced education attitudes observed in earlier reports led to increased enrolment in education and training. learn$ave-plus participants spent, on average, $2,142 more on education compared to the control group.
• The micro-enterprise stream experienced large increases in self-employment incidence, driven by matched credits. The matched saving credits significantly increased (by 24.5%) the chances that a participant be self-employed, compared to the control group’s 42.1%.

Points to consider

Relevance: Relevant to understanding the impact of matched saving schemes on behaviour, but the focus of the programme to increase access to education and enterprise and not financial capability may not be transferable.

Generalisability: All participants chose to engage with the concept of savings to fund education or enterprise. Findings may not transfer to the general population.

Methodological strengths or limitations: This study used an experimental design at three sites.

Full report

learn$ave individual development accounts project - full report