How do transfer payments to low income households affect the incentive: to have a child at an early age, to drop out of high schools, and the abandonment of children by fathers? 2

Ans 1

Transfer Payment refers to the transfer of income (or redistribution of income or wealth) to the people without getting any product or service in return for that. The government does so to assist the weaker and dependent sections of the society , this is helpful in making marginalized people afford the basic necessities. It is also helpful when conditional transfers are paid which makes sure that a certain goal is achieved (education/admission) before or during receiving the amount in installments. The government transfers payments through various methods given below

• Social security benefits like pensions etc
• Other security benefits like food stamps
• Unemployment benefits
• Free ration to poor households
• Old age insurance and free health facilities
• Reimbursement of Tution fees of children belonging to poor families
• Direct benefit transfers in the name of girl child for study and marriage after a certain age

The transfer payment ensures poor households get access to health , education and food. In long term the education shapes the mindset of society and make them more aware of the drawbacks of early child bearing. An availability of cash also make people less inclined towards raising more children to get more helping hands in sustaining family.

A major reason for children to drop out of schools is the lack of as basic necessity as food on regular basis. This pushes them to stop spending on other things, drop out of school and help their parents in earning some money. Transfer payments incentivize poor household to educate their children without caring for basic needs and sustaining their family.

Children especially girl child is considered a burden on many families because of financial burden of marrying a girl. The lack of enough work and income plays a significant role in providing good education, health and upbringing. Transfer payments are helpful in providing such basic things and lowers the rate of abandonment of children bt their fathers.