Private and public transfers: substitute or complement?

Anna A Mironova,Lydia A Shenshina

doi:10.3897/popecon.5.e60293

Abstract

The paper analyzes the relationship between private and public social transfers in Russia. The research relies on the data from the Russian Longitudinal Monitoring Survey (RLMS-HSE) carried out by the Higher School of Economics in 1994–2018. The household is the unit of the analysis, the method of logistic regression is applied. The study has shown that when a household receives public social transfers, it is less likely to receive private transfers. So, the findings appear to bear out the hypothesis that public transfers crowd out private transfers in Russia.

Highlights

Public transfers often serve to compensate for shortcomings of the system of public transfers of funds — in particular, in difficult periods of socio-economic upheavals and/or reforms (Ovcharova and Prokofieva 2000)
Our study shows that when a household receives public social transfers, it is less likely to receive private transfers
The findings reveal negative correlation between private and public social transfers in Russian Academy of Sciences (Russia)

Summary

Introduction

Public transfers often serve to compensate for shortcomings of the system of public (social) transfers of funds — in particular, in difficult periods of socio-economic upheavals and/or reforms (Ovcharova and Prokofieva 2000). Reforms aimed at optimizing and improving a system of social security sometimes get in the way of providing citizens in need with a timely and effective assistance. Countries with a weak social security system normally have a high level of unofficial transfers among relatives, friends, neighbors. Private transfers are the most important element of incomes and expenditures in nearly every developing nation (Rempel and Lobdell 1978; Cox and Jimenez 1990; Maitra and Ray 2003). Most of intergenerational transfers are directed from children to parents.

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Discussion

Conclusion