In
economicsEconomics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, a
transfer payment (or
government transfer or simply
transfer) is a redistribution of income in the
market systemA market system is any systematic process enabling many market players to bid and ask: helping bidders and sellers interact and make deals. It is not just the price mechanism but the entire system of regulation, qualification, credentials, reputations and clearing that surrounds that mechanism and...
. These payments are considered to be nonexhaustive because they do not directly absorb
resourcesIn economics, factors of production are the resources employed to produce goods and services. They facilitate production but do not become part of the product or are significantly transformed by the production process...
or create
outputOutput in economics is the total value of all of the goods and services produced in an entity's economy. It is a concept used in macroeconomics, or the study of the economic transactions of broad groups such as countries....
. Examples of certain transfer payments include welfare (financial aid),
social securitySocial security is primarily a social insurance program providing social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
, and government
subsidiesA subsidy is a form of financial assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more...
for certain
businessA business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself...
es (firms).
In some federal systems the term is also used to refer to payments from one order of government to another; for example in
CanadaCanada is a country occupying most of northern North America, extending from the Atlantic Ocean in the east to the Pacific Ocean in the west and northward into the Arctic Ocean...
, transfer payments usually refer to a system of payments from the federal government to the provinces.
In
economicsEconomics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, a
transfer payment (or
government transfer or simply
transfer) is a redistribution of income in the
market systemA market system is any systematic process enabling many market players to bid and ask: helping bidders and sellers interact and make deals. It is not just the price mechanism but the entire system of regulation, qualification, credentials, reputations and clearing that surrounds that mechanism and...
. These payments are considered to be nonexhaustive because they do not directly absorb
resourcesIn economics, factors of production are the resources employed to produce goods and services. They facilitate production but do not become part of the product or are significantly transformed by the production process...
or create
outputOutput in economics is the total value of all of the goods and services produced in an entity's economy. It is a concept used in macroeconomics, or the study of the economic transactions of broad groups such as countries....
. Examples of certain transfer payments include welfare (financial aid),
social securitySocial security is primarily a social insurance program providing social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
, and government
subsidiesA subsidy is a form of financial assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more...
for certain
businessA business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself...
es (firms).
Use for administrative transfer
In some federal systems the term is also used to refer to payments from one order of government to another; for example in
CanadaCanada is a country occupying most of northern North America, extending from the Atlantic Ocean in the east to the Pacific Ocean in the west and northward into the Arctic Ocean...
, transfer payments usually refer to a system of payments from the federal government to the provinces. Major Canadian transfer payments include
equalization paymentsEqualization payments are cash payments made in some federal systems of government from the federal government to state or provincial governments with the objective of offsetting differences in available revenue or in the cost of providing services.-Canada:...
, the
Canada Health TransferThe Canada Health Transfer is the Canadian government's transfer payment programme in support of the health systems of the provinces and territories of Canada...
and the
Canada Social TransferThe Canada Social Transfer is the Canadian government's transfer payment programme in support of post-secondary education, social assistance and social services, including early childhood development and early learning and childcare...
(formerly the
Canada Health and Social TransferThe Canada Health and Social Transfer was a system of block transfer payments from the Canadian government to provincial governments to pay for health care, post-secondary education and welfare, in place from the 1996-97 fiscal year until the 2004-05 fiscal year...
) and
Territorial Formula FinancingTerritorial Formula Financing is an annual unconditional transfer payment from Canada's federal government to the three territorial governments of Yukon, the Northwest Territories, and Nunavut to support the provision of public services....
.
See also
- Public finance
Public finance is a field of economics concerned with paying for collective or governmental activities, and with the administration and design of those activities. The field is often divided into questions of what the government or collective organizations should do or are doing, and questions of...
- Generational accounting
Generational accounting is a method of national accounting for measuring redistribution of lifetime tax burdens across generations from social insurance, including social security and social health insurance....
- Government budget
A government budget is a legal document that is often passed by the legislature, and approved by the chief executive-or president. For example, only certain types of revenue may be imposed and collected...
- Transfer payments multiplier
The Transfer payments multiplier is the multiple by whichAggregate demand will increase, when there is an increase in transfer payments...
- Workfare
Workfare is an alternative model to conventional social welfare systems. The term was first introduced by civil rights leader James Charles Evers in 1968; however, it was popularized by Richard Nixon in a televised speech August 1969. Traditional welfare benefits are available with little...
External links