Editing Transfer payment (section)

== Criticism ==
A criticism of transfer payments is that they do not produce outcomes that are economically advantageous. Governments pool [[tax]]es and other [[Government revenue|sources of revenue]] together and spend the money to further a certain agenda. Some of the spending pays for goods and services, such as buildings, equipment, and government worker salaries. These expenditures are exchanges in which money is traded for something with a recognized value. The payments may be viewed as boosting [[industrial activity]] and [[employment]]. However, government transfer payments do not boost production or economic activity. For example, foreign aid does not necessarily prompt foreign trade.<ref>{{Cite book|title="Transfer Payments," Encyclopedia of Business and Finance|last=Evans|first=Kim Masters|publisher=Gale|year=2014|pages=750–752}}</ref> Additionally, some argue that [[welfare program]]s, such as unemployment benefits, reduce incentives to take paid work.

Furthermore, the macroeconomic effect of transfer payments is reduced in the lower income countries and regions/states. The reasons for such disparity are the following:<ref name=":1">{{Cite journal|last=Smeeding|first=Timothy M.|date=1977|title=The Antipoverty Effectiveness of In-Kind Transfers|journal=The Journal of Human Resources|volume=12|issue=3|pages=360–378|doi=10.2307/145496|issn=0022-166X|jstor=145496}}</ref>

* the level of transfer payments is subject to the fiscal capacities of the administering entity  
* the size of transfer payments is generally dependent on the previous earnings of the beneficiary 
* largest share of transfer payments is typically administered to the older age groups, which constitute to a smallest share of population of the lower income countries, regions or states