Private Transfer Payments, Inequality, and Poverty: From the Perspective of Households

Abstract

Private transfer of wealth is a ubiquitous phenomenon in both urban and rural areas of China. This paper took an inflow private transfer payment as the research object and used the China Household Finance Survey data to analyze the impact of inward private transfer payment (IPTP) on social welfare and family welfare. According to the result of logit regression, we found the following: there is an age at which households are least likely to receive private transfer payments; families with living partners (including married and cohabiting couples) are more likely to receive private transfer payments; the worse the health of householders, the more likely they are to receive private transfer payments; rural households are more likely to have IPTPs than urban households. From the perspective of social welfare, the IPTP has seemingly decreased social inequality, especially in the case of rural areas. However, the counterfactual analysis finds that IPTP increases inequality. Analysis from three aspects of income, consumption, and family poverty level finds that IPTP not only subsidizes the family income directly but also promotes increases in family income indirectly. It also stimulates family consumption expenditure, with an increment of approximately 5000 yuan. Although it increased household income, as well as consumption expenditure, IPTP did not have a significant impact on the poverty level of Chinese households. On the whole, the existence of IPTP does not improve social welfare but improves family welfare. At the same time, IPTP has no significant effect on the reduction of family poverty.