Another Leak in the Bucket? Public Transfer Income and Private Family Support

Families receive income from a variety of sources. Two potential sources are government transfers and private transfers received from relatives and friends. This study analyzes the relationship between these two sources of income. Specifically, it examines whether government transfers displace or crowd out private support networks and, if so, the extent to which they do. It is found that participants in public transfer programs do receive private support and that these private networks are fairly pervasive; twenty-six percent of those receiving Aid to Families with Dependent Children, Unemployment Insurance benefits, or Worker's Compensation in 1987 also received private transfers in that year. After establishing the existence of private transfer networks, estimates of crowding out are obtained. Analyzing the Unemployment Insurance program, it is found that unemployment compensation displaces familial support by as much as 30 cents per dollar.