Do Public Transfers Crowd-out Private Transfers? Evidence from the Thai Socio-Economic Panel Survey

Abstract

There exists both theoretical and empirical evidence, which shows that public transfer programs crowd-out private transfers. This study takes advantage of three waves of Thai Socio-Economic Panel Survey, during the period 2005-2007 to investigate the connection between public transfers and private transfers in Thailand. Thai agricultural households who have been one of the main targets of Thai government transfers over the past several decades are used as a sample group. The Tobit, probit and logit model are used to estimate and to check the robustness of the results of the relationships between private and public transfers. The empirical results revealed that crowding-out exists, especially the households in the Northeastern region.  Therefore, in order to avoid dead-weight loss, public transfer should be implemented with care. Targeting household groups should increase the effectiveness of public transfers programme and then actually raises Thai household welfare.