Transfer payments
Definition. Transfer payments are payments made by the government to individuals for which no good or service is given in return, such as welfare benefits and pensions. They redistribute income rather than reward current production, and so are not counted as part of national output.
Because they raise the disposable incomes of lower income households, transfer payments help reduce income inequality and can lower the Gini coefficient. They are excluded from gross domestic product to avoid double counting.
This term belongs to The Gini Coefficient in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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