THE IMPACT OF SOCIAL
TRANSFERS IN KIND ON
HOUSEHOLDS INCOME
DISTRIBUTION
Prepared by Mr. Oz Shimony and Mr. Pablo Mandler
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Introduction
Income, consumption and STK in the SNA
Allocation of STK
Methods being used
Main findings
Conclusions and observations
Work to be done
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Introduction
Updating previous work on the effects of social
transfers in kind (STK) on the households’
income distribution
• Previous work
– March 1997 (1992 Data)
– April 2000 ( 1992 Data)
• Current work
– November 2010 (2007 Data)
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Income, consumption and STK in the SNA
“Social transfers in kind consist
of goods and services provided
to households by government
and NPISHs either free or at
prices that are not
economically significant.”
SNA 2008 pa. 8.141
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Income, consumption and STK in the SNA
Households’ adjusted disposable income
Social Transfers in Kind
Households’ disposable
income
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Income, consumption and STK in the SNA
Actual Final Consumption
Social Transfers in Kind
Final consumption expenditure
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Allocation of STK
• STK allocation to groups of households
enable us to analyze the role of the general
government in the redistribution of income
processes in a much wider framework
• In our work, STK has been allocated to the
different deciles, which were defined in the
household surveys (households were
assigned to each decile according to net
income per standard person).
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Allocation of STK
As a result several stages of income distribution
were examined (adjusted to the surveys’ definitions)
• Households' income in the form of compensation
of employees, property income and pensions.
• Households' income after adding receivable
current transfers (excluding pensions).
• Households' income after deduction of current
transfers payable.
• Households' after adding STK from general
government and NPISH
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Methods
• STK are generated only by
general government and NPISH
• In the work done till now only
health and education, which
constitute 75% of total STK, were
allocated to the different deciles
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Methods - Education
• Two main sources – Education satellite account,
household survey
• The total (non distinguished) method has been
used
• A breakdown of production costs by level and type
of education among the different deciles.
• Number of students, by decile and type of
education services.
• Households’ payments for education services, by
level and type of education
• Average costs from satellite accounts were
assigned to pupils classified by level, type of
education and decile
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Methods - Health
• Risk-related insurance policy approach
• Households’ purchases to market and
non market producers were separated
• STK = Imputed household premium
household payments
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Methods - Health (data required)
• National accounts
– Production costs of health services by general
government and NPISH, by type of expenditure.
– Sales to households.
• Households’ survey
– Disposable income of households, classified into
deciles
– Payments made by households for health services
detailed by item
– Size of households and age composition of the
population in each household decile
• Ministry of health
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– Capitation coefficients
Capitation Model
AGE
Parameter
0
1.55
1-5
0.96
6-14
0.47
15-24
0.4
25-34
0.57
35-44
0.68
45-54
1.07
55-64
1.69
65-74
2.86
75-84
3.56
85+
4.06
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Main Findings
1992
2007
100
100
Households' final consumption expenditure
84
87
Social transfer in kind - total
17
22
1.Education
8
10
2.Health
5
7
3.Welfare and social security
2
3
4.Culture and religion
1
2
5.Housing and community services
2
1
Households' adjusted disposable income
117
122
Households' actual consumption
102
108
Households' disposable income
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STK - Services Distribution - 2007
(Percentages, Total=100)
Education
44.4
Health
31.1
Welfare and social security
13.5
Culture and religion
8.4
Housing and community services
2.7
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1. Income of Households in the First Decile as
Percentage of Households' income in the Tenth Decile*
30
26.9
26.6
25
18.9
20
15
10.5
10
8.1
5
3.3
0
A
B
1992
C
2007
A = Primary income and pensions
B = Disposable income (A minus current transfers, excluding pensions, net)
C = Adjusted disposable income (B plus social transfers in kind
of education and health services)
* Of disposable income per standard person.
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1. Social Transfers in Kind of Education and Health Services
as Percentage of Households'
`
Disposable income, by Decile*, 2007
180
160
140
120
100
80
60
40
20
0
1
2
3
4
5
Total
Decile
6
Education
7
8
9
10
Health
* of dispoable income per standard person
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2. Social Transfers in kind of Education Service to Housholds, by Decile* and Level of
Education, 2007
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1
2
3
4
5
6
7
8
9
10
Decile
PrePrimary
Primary
Secondary
Tertiary education
Other
* of dispoable income per standard person
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Conclusions and observations
• The allocation of STK allows a deeper analysis
of income distribution processes
• STK becomes a major component of adjusted
disposable income and actual consumption the
lower the decile
• Different character of the effects of monetary
transfers as compared to STK
• Allocation of STK on education and health is
important because it is expected to affect the
future distribution of primary income among the
different deciles.
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Work to be done
• Welfare
• Culture & religion
• Housing and community services
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Thank you for your attention!
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