Style: MLA. More from Merriam-Webster on transfer payment Britannica. Get Word of the Day daily email! Test Your Vocabulary. Test your vocabulary with our question quiz! Love words? Need even more definitions? Homophones, Homographs, and Homonyms The same, but different. Merriam-Webster's Words of the Week - Nov. Ask the Editors 'Everyday' vs. What Is 'Semantic Bleaching'? There are so many different types of transfer payments.
Where can I go to find out what they mean? These definitions are available in the regional definitions section of the BEA website. In the U. These payments are considered a redistribution of wealth from the well-compensated to the poorly compensated. They are made both for humanitarian reasons and, at times of economic distress, to help stimulate the economy by putting more money into people's hands.
The most well-known form of transfer payment is likely Social Security payments, whether for retirement or disability. These are considered transfer payments even though most recipients have paid into the system during their working lives. Similarly, unemployment payments are also considered transfer payments.
There are many other types of transfer payments. They can be made from one person to another or even from an individual to an organization.
These can include individual donations to charities or non-profit organizations, or even a simple cash gift from one person to another. Subsidies for education and training are also considered a type of government transfer payment. This includes transfers to companies or labor groups that provide educational services or operate apprenticeship programs. Transfer payments do not include subsidies paid to farmers, manufacturers, and exporters, even though they are a one-way payment from the government.
Transfer payments are often introduced or expanded during severe economic recessions. Social Security, for example, was created by the Roosevelt administration during the Great Depression. Many countries provide direct cash assistance to people during economic recessions as a way to support those in need and stimulate the economy.
According to Keynesian economics , there is a " multiplier effect " to transfer payments, meaning every dollar in payments stimulates a chain reaction that results in more spending than merely the original dollar.
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