Seoul City's new income model offers ‘Stepping Stone’ out of poverty

Seoul Mayor Oh Se-hoon, front row center, poses with speakers of the Seoul International Forum on Stepping Stone Income 2025 at Dongdaemun Design Plaza in Seoul, Tuesday. Courtesy of Seoul Metropolitan Government

Seoul’s Stepping Stone Income program is being promoted as a more effective alternative to Korea’s primary social safety net, the Basic Livelihood scheme, with new evidence suggesting that it helps low-income households move off public benefits while improving living standards, work incentives and community participation.

At Tuesday’s international forum on the initiative, Mayor Oh Se-hoon and leading scholars said the three-year policy experiment offers a practical blueprint for overhauling social safety nets in the age of artificial intelligence (AI) and increasingly precarious work.

According to Lee Jung-min, an economics professor who led the research on the program’s effects at Seoul National University, the share of beneficiary households that exited from receiving benefits in the program's third year rose by 1.1 percentage points compared with its second year. Meanwhile, the proportion of households whose labor income increased climbed by 2.8 percentage points, while spending on basic goods and nutrition indicators also improved.

Launched in 2022 and concluded in June, Stepping Stone Income ― or “didimdol” in Korean ― supplements the earnings of households making less than 85 percent of Korea’s median income. Unlike the national Basic Livelihood Security System, which typically cuts benefits as soon as income crosses a strict threshold, the Seoul scheme guarantees eligibility for a fixed period even if earnings rise above the line, easing what is known as the “welfare cliff” that often discourages people from taking jobs or working more hours.

Under the program, recipients receive roughly half the gap between their earnings and a benchmark set at 85 percent of the median income, with payments tapering gradually as wages rise rather than ending abruptly.

The data shows a mixed picture on work. Among household heads, the share who worked fell by just over 10 percentage points, but there was no sign that other family members worked less. The professor and other researchers note that this drop in work by heads could mean weaker incentives, but it may also reflect people spending more time on education, training, caregiving and health, which could raise productivity and well‑being in the long run.

The biggest gains appeared among the poorest families.

Very low‑income households that moved from the national basic livelihood program into Stepping Stone Income saw their incomes and spending on essentials rise, and their chances of moving off long‑term benefits improve.

For some observers, the program’s impact reaches beyond paychecks to the health of local communities. Amy Castro, a professor of social policy at the University of Pennsylvania, said the study showed that once basic needs are met, people begin to engage more deeply with their communities.

“We’re seeing that increase in people participating in the economy, people participating in the community,” she said during the discussion. “After meeting basic necessities, the next thing they did is give back to the community.” Programs like Stepping Stone Income, she argued, can help restore a sense of belonging and enable low‑income residents not just to survive, but to play an active role in shaping their neighborhoods.

James A. Robinson of the University of Chicago, the 2024 Nobel laureate in economics, speaks during the Seoul International Forum on Stepping Stone Income 2025 at DDP in Seoul, Tuesday. Yonhap

The forum also spotlighted deeper structural tensions in the nation’s development model.

James A. Robinson of the University of Chicago, the 2024 Nobel laureate in economics and the keynote speaker at the event, praised Korea’s dynamic and successful private sector but argued that its public sector has lagged behind, leaving the country with what he called “a Western Europe‑style economy with a Latin American‑sized state.”

Korea is “almost the lowest social spender in the OECD ― like a Latin American country,” he said, suggesting that “one could draw the conclusion that Korea needs to expand the role of the public sector.”

He described the Korean model, “based so singularly on the flourishing and prioritizing of the private sector,” as having “neglected the state,” calling this ironic given that economists often cite Korea as a quintessential case of “state‑led industrialization.” The scholar cast the Seoul experiment as one step toward rebalancing that model, arguing that inclusive public institutions and stronger social protection must keep pace with private‑sector dynamism if Korea is to achieve sustainable economic growth.

Julia Shu‑Huah Wang, a professor at National Taiwan University, described the program as “a valuable lesson” for governments grappling with increasing inequality and insecure work, saying that a well‑targeted income floor that maintains incentives to work can be adapted to different national contexts.

Mayor Oh, in his welcoming remarks, drew a contrast between Stepping Stone Income and universal basic income, which some political circles promote as a response to AI‑driven job disruption. He warned that, while some see basic income as a simple answer to the anxiety caused by rapid technological and social changes, “covering that anxiety with cash handed out equally to everyone” may not be a sustainable solution.

“These kinds of short-term fixes to get us through the moment will inevitably turn into an explosion of debt that future generations will be forced to bear,” Oh said. “Stepping Stone Income is not a scheme that scatters public money indiscriminately. It is a future‑oriented income security model that provides stronger support to struggling neighbors while creating an opening for growth by helping them get back on their feet and take on new challenges.”