Premium
ARE PRIVATE TRANSFERS CROWDED OUT BY PUBLIC TRANSFERS? THE CASE OF NEPAL
Author(s) -
KANG Sung Jin
Publication year - 2004
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.2004.tb00248.x
Subject(s) - tobit model , probit , probit model , government (linguistics) , demographic economics , economics , household income , crowding out , inequality , order (exchange) , crowding , transfer (computing) , estimation , labour economics , public economics , econometrics , geography , finance , monetary economics , management , mathematical analysis , linguistics , philosophy , mathematics , archaeology , parallel computing , computer science , neuroscience , biology
Using household data from Nepal for 1995/96, this paper investigates the motives underlying private transfers and examines whether or not public transfers crowded out private transfers and the resultant effects on income inequality. The estimation results of Probit and Tobit models show that the private transfers received were altruistically motivated while public transfers exerted no crowding‐out effect. Although the probability of receiving private transfers decreases with household size, having more children or more elderly members of the family increases the probability as well as the amount of transfers. By contrast, the age of the household head does not appear to be a significant factor. Furthermore, the study shows that public transfers did not contribute to a lowering of income inequalities among households. These findings suggest that the Government of Nepal should design its public transfer schemes in order to improve the effectiveness and efficiency of its social safety net programs.