Recently, interest in social services has been rapidly increasing in South Korea because of an aging population, nuclear families, an increase in female participation in the workforce, and other demographic and social structural changes. Demands for social services have been rising rapidly as a result of these changes, and government spending will likely increase to meet these demands. It is therefore imperative to review government institutions to ensure transparency and efficiency in social service investments and spending and to establish improvement measures.The South Korean government introduced e-voucher programs for delivering social services in 2007 to meet increasing demand for welfare services in step with socio-economic changes. The Social Service e-Voucher Program issues purchasing cards to social service recipients, who then have the option of choosing service providers. Generally, e-vouchers come in the form of cash cards, and all administrative processes from applications for services and service usage to payments and settlements are recorded through a computerized system.One of the biggest changes brought on by the e-voucher program was giving consumers more choices. Prior to the introduction of e-vouchers, government social services were delivered through designated suppliers, without allowing beneficiaries any other options. However, with e-vouchers, consumers have been able to select service providers of their choosing, which has induced competition among social service providers.Issuing e-vouchers for social services delivery, then, is sig-nificant in that it has widened the scope of consumer choice and created conditions for improving the social service market through competition. From an economic perspective, e-voucher programs are highly likely to induce structural changes in the social service market, thereby transforming user behavior. Hence, it is very important to analyze how the social service market and consumer behavior have changed since the introduction of Social Service e-Voucher Programs.Despite the urgency of such an analysis, relevant economic studies on the results of the introduction of e-voucher programs are seriously deficient. The studies mainly focus on social welfare or public administration-related topics, such as the qualitative evaluation of the introduction of e-vouchers, the quantitative increase in the number of users and service providers, cost efficiency, transparency in budgeting, level of satisfaction of service providers and beneficiaries, and measures to curb illegal use. Major academic works include those by Bae (2007), Choi and Choi (2007), Lee (2008), Kim (2009), Lee et al. (2009), and Eom (2010).Of course, there have been a few studies that address the economic aspects of the Social Service e-Voucher program. Kim(2010), Kim(2010), and Lee and Park (2011) are such examples. Kim(2010) examined activity assistance services for persons with disabilities from an economic perspective, conducting an empirical analysis of service effectiveness. By analyzing the market structure based on market shares, the Herfindahl Index, and determinants for service charge, he provided policy suggestions to enhance the efficiency of voucher programs. His market-structure analysis revealed that cities with larger populations and larger markets exhibited more intense market competition. However, in contrast to metropolitan areas, rural areas had environments only suitable for rudimentary market competition, which significantly put the goals and objectives of e-voucher programs at a disadvantage. This makes it necessary to create a favorable environment in those areas to induce competition in the social service market.Kim(2010) empirically analyzed how market competition levels, consumer choice of services, user characteristics and service provider characteristics affect the quality of social services. He concluded that the choice of services significantly affect service quality.Lee and Park (2011) examined the influence of geographical distance and the profitability of service providers on consumer choice in the mother-infant help services market. Their research found that the geographical distance between consumers and service providers had a significantly negative relationship with the frequency of service use. Furthermore, in larger administrative areas, consumer choice was still limited even though there existed a number of service providers.These researches used econometric analysis to examine the market structure and consumer behavior after the introduction of e-voucher programs. However, they failed to look at whether consumer choice has really improved, which is the main purpose of the introduction of the e-voucher programs. Considering that one major goal behind introducing e-voucher programs was to spur competition in the market, it is very important to analyze the effect of the program on consumer choice. With this understanding, our research analyzes the changes in consumer choice that previous studies have overlooked.Our approach is similar to that of Kim(2010), who analyzed market structure determinants. However, unlike Kim, we explicitly address how consumer choices have been changing. In addition, in our analysis on determinants of market structure, we include as independent variables not only region-specific variables, such as fiscal independency and population density, but also user characteristic variables (average age of users, users’ monthly average insurance premiums, etc.). Furthermore, we use panel data analysis for greater accuracy in our measurements for the analysis model, whereas Kim utilized a simple OLS.A tremendous amount of data has to be collected for evaluating the changes in consumer choices and market structure. The Korea Health and Welfare Information Service (KHWIS), which collects and manages e-voucher-related data, has data on more than 30 million observations (from the period 2008 to 2011). Because this huge amount of raw data is in a format inappropriate for statistical analysis, reprocessing was necessary. The sheer volume of data made it impractical for analyzing all services; thus, our research was confined to the Mother-Infant Help Service.The Mother-Infant Help Service was selected for analysis for the following reasons. First, the markets for other social services were created less than four years ago and cannot be considered to have fully-functioning markets. If the research methods often applied in studying industrial organizations were employed, the interpretation of the research outcome might be questioned. The market for mother-infant help services, however, is relatively mature and has already had private sector players supplying relevant services prior to the introduction of the e-voucher system. Compared with other services, it provided more options and freedom of choice to consumers. Thus, the Mother-Infant Help Service was considered as the most appropriate service for applying a measuring analysis method commonly used for studying other industrial sectors.This research utilized Social Service e-Voucher Usage Data provided by the KHWIS in order to examine user profiles and changes in service providers. E-voucher service usage data is transmitted from service providers to the KHWIS in real time and is digitally stored. It should be noted that our research analysis does not cover service usage data that is not transmitted to the KHWIS, even if the service is delivered through e-vouchers. Certainly, it would have been ideal to utilize data covering the entire social service market, but such data does not exist. Therefore, utilizing accessible data that at least partially reflects the entire social service market is the best alternative for analysis. It is also important to understand that e-voucher programs account for a sizable portion of the social service market. Thus, it would not be unreasonable to deem a specific e-voucher market as representative of the whole social service market structure.As such, this research analyzes the Mother-Infant Help Service market with KHWIS e-voucher usage data.This study tests whether consumer choice has been strengthened and how market structure has been changed in the Mother-Infant Help Service with the introduction of social service e-voucher programs. Moreover, this study estimates the determinants of market structure by adopting panel data analysis.This study consists of six sections
