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Should Subsidized Private Transfers Replace Government Social Insurance?
Author:
Connel Fullenkamp null

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Mr. Ralph Chami
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Series:
IMF Working Papers
Volume/Issue:
Volume 2000: Issue 150
Language:
English
Publication Date:
01 Aug 2000
DOI:
https://doi.org/10.5089/9781451856958.001
ISBN:
9781451856958
ISSN:
1018-5941
Pages:
26
Keywords:
WP; labor market; utility function; equilibrium price; marginal utility; Altruism; charity; asymmetric information; social insurance; nonmarket transfers; non-governmental organizations (NGOs); labor market outcome; welfare effect; labor market externality; consumption externality; income risk; labor market response; welfare cost; Tax allowances; Social assistance spending; Labor markets; Moral hazard; Income
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Private transfers between individuals or through organized charities are increasingly viewed as an alternative for government social insurance programs. This paper models the incentive effects of government subsidized private transfers and finds that while there is a significant welfare benefit to subsidizing private transfers, there is also a significant welfare cost to this policy. It is shown analytically, as well as through simulations, that the optimal subsidy to private transfers is positive for a wide range of parameter values. This result indicates that subsidized private transfers in net terms are welfare enhancing.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund