Assessing The Welfare Effect Of The Private Transfers

Private transfers are gifts in the form of cash or non-cash happening between family, friends and neighbors or time assistance. In developing countries, private transfers are widespread. It may play a vital role in a country’s income redistribution and the stable operation of the economic. Overseas research for private transfers mostly focus on the study of its motivation, and more on the form of remittance, inheritance, etc. Domestic researches for private transfers are scarce, not to mention the research for their welfare effect. In our country, what are the factors influencing private transfer? What welfare effect do private transfers have on urban and rural households? The study of these questions not only can provide reference for government ant-ipoverty decision-makings, but also can provide complement for household economics theory. In view of the data, this article only study the form of economic help, using a counterfactual analysis method PSM to study the private transfers’welfare effect to urban and rural households in our country.The thesis is divided into six sections:Chaper1. Introduction. This section introduces the background and significance of the topic, concept definition, research methods, list its innovation and shortages. Chaper2. Literature reviews. This section reviews the related domestic and foreign literatures. Chapter3. Research model. This section introduces the empirical methods and models we will use. Charper4. Date sources and descriptive statistics. This part first introduces the data sources and defines the variables we will use. Then, we make the descriptive statistics for the sample. Charper5. Empirical analysis. This section first makes the Logit regress on the rural and urban samples respectively, so that we get the scores. Then, we use three match methods to go on the score matching, including Caliper matching, Core matching, Mahalanobis matching. Finally, we calculate the average effect of some key variables (like poverty rate, income, education costs,etc),with which we analyze the impact to family welfare the private transfers have. Charper6. Conclusion. From the empirical results, we get the conclusion, and then we put forward some policy suggestions.In this paper, we get the following conclusions:(1) Private transfers rise the poverty rate of the recipient families, instead of reduce. Probably because financial support from families and friends leads the recipient families to be lazy and reliant, so that they reduce their own labor and investment, thus their revenues fall.(2) In rural areas, the private transfers have the "crowding out" effect, showing more characters of altruistic motives. And in urban areas, the private transfers have the "crowding in" effect, showing more characters of exchange motives.(3) Private transfers increase the commercial income (like service business, manufacturing business, construction business, etc.) of recipient families. Private transfers deepen the gap in urban, making the rich richer, the poor poorer. So, they enhance the income inequality in urban areas.(4) Private transfers increase the education spending of the recipient families both in urban and rural areas.