Similar to the beginning of many new eras, the dawning of the 21st century has brought new opportunities as well as new challenges to the stability of our economy. New technology offers more efficient methods of production while the continuing influence of globalization increases market availability for our goods. Yet, when a region has a hard time transitioning to a new economy, the challenges produced by these changes are often overwhelming and can create hardship. Rural America is currently facing many of the difficulties associated with these changing economies, thus affecting their current economic sustainability and development. The industry base change from manufacturing to service in the late half of the 20th century produced high unemployment rates from the loss of factory jobs and although the new service base created jobs, most were low-wage with minimal or no benefits (Falk and Lobao, 1995). Furthermore, because of the differences in economic resources, population and geography, rural areas are highly diverse (Oakerson, 1995).
These conditions only added to the rising poverty rates for rural areas. While the rural poverty rate, as well as the national poverty, began to decline after reaching a high of 17.3 percent in 1993, it has since began to rise again and in 2002 stood at 14.2 percent. Furthermore, rural poverty rates have historically been higher than urban poverty rates, leaving rural communities at even more of a disadvantage (Economic Research Service, 2004). One policy approach being discussed in current dialogues is wealth creation (asset building). Some researchers have suggested that asset building in rural areas might be a viable solution to help reduce poverty and increase economic assets in these regions (Dorward, Anderson, Clark, Keane, & Moguel, 2001; Curley & Grinstein-Weiss, 2003).
The purpose of this study is to examine the performance of rural participants in an assets building program – the Individual Development Account (IDA). IDAs are matched savings accounts for low-income households, where the savings are used for specific purposes including home purchase, post-secondary education, and microenterprise.