Transfer payments are given by government of various levels to under-privileged society members like unemployed workers, the elderly who’s unable to maintain a decent life by inability to work and such.
Transfer payments are a one of the primary means to leverage national income and make it more balanced and fair in wealth allocation. It’s funded by taxation which places a significant percentage over especially those who are earning apparently more than average.
Effects of transfer payment
While general agreement exists concerning the effect of the changing age-sex composition on unemployment, the other factors we consider are more controversial.
The first is the effect of government transfer payment programs. Some argue that growth in these programs has contributed substantially to the upward trend in the unemployment rate. Among the programs cited in this regard the most important is unemployment compensation.