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.
Highlights
The phenomenon of private transfer payments is prevalent in developing countries, and is used as an imperfect social security system to counterbalance the drawbacks of the capital market
The following contents are arranged as follows: the second part is the literature review; the third part is data and methods, which introduces the sources of data used in this paper, summarizes the variables used in the study, analyses the impact of inward private transfer payment (IPTP) on income inequality, and the estimation methods used in subsequent empirical research; the fourth part is the empirical results: first, logit regression estimation is displayed, and the income effects, consumption effects, and poverty effects of family IPTPs through the propensity score matching (PSM) method are discussed; the fifth part is the counterfactual analysis using the Heckman two-step method; the sixth part and the seventh part are the mechanistic analysis and the research summary of this paper, respectively
This paper took IPTP as the research object and used China Household Finance Survey Database (CHFS) data to analyze the impact of IPTP on income inequality and social poverty
Summary
The phenomenon of private transfer payments is prevalent in developing countries, and is used as an imperfect social security system to counterbalance the drawbacks of the capital market. Private transfer payments mostly come from parents’ subsidies for a series of expenses, such as living expenses, purchasing a house, and renting an apartment, so that wealth can be transferred from generation to generation This intergenerational transmission of wealth may narrow the income gap between households and improve the situation with respect to the income inequality of urban households, but it may make the rich become richer and deepen inequality. Research on this issue will help us understand how private transfer payments affect people’s living standards and the distribution and flow of social wealth, to provide support to alleviate the widening income gap and reduce social poverty. The following contents are arranged as follows: the second part is the literature review; the third part is data and methods, which introduces the sources of data used in this paper, summarizes the variables used in the study, analyses the impact of IPTP on income inequality, and the estimation methods used in subsequent empirical research; the fourth part is the empirical results: first, logit regression estimation is displayed, and the income effects, consumption effects, and poverty effects of family IPTPs through the propensity score matching (PSM) method are discussed; the fifth part is the counterfactual analysis using the Heckman two-step method; the sixth part and the seventh part are the mechanistic analysis and the research summary of this paper, respectively
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