Achieving Social Objectives through Private Transfers: A Review

Private interhousehold cash transfers are an important source of income in many developing countries. Among the countries whose experience is reviewed in the article, the proportion of all households receiving private transfers ranges from a fifth to a half. The amounts received are large, particularly when compared with the incomes of the poorest households. Understanding more about these transfers is important for designing policy because, among other things, these remittances provide social and economic benefits similar to those of public programs, such as unemployment insurance, pension support, educational credit, and health assistance. As such, private transfers may supplement or overlap with public transfers, and, if private donors give less as public transfers increase, the effect of public programs on beneficiaries will be less than originally intended. Or the transfers may alter the distribution effects of public programs for again, if private donors give less as public transfers increase, they share in some of the benefits of public programs.

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