Elements of the System of Financing Social Transfers and Assessment of Factors Affecting Them in Latvia

The aim of the present research paper is to investigate the elements forming the system of financing social transfers and the factors affecting them. The system of financing social transfers was investigated, the socio-economic factors affecting the state social insurance special budget were analysed, and the changes in revenues and expenditures of the state social insurance special budget were assessed in the present paper. The key element of the system of financing social transfers is the state social insurance special budget. The research showed that there was a strong causal relationship between the state social insurance special budget's revenues and the number of socially insured persons as well as the average wage subject to insurance contributions of socially insured persons. The number of socially insured persons is significantly affected by employment -the number of socially insured persons grows at a greater rate, with the increase in the number of employed individuals. An annual deficit has emerged in the state social insurance special budget since 2009, thus, decreasing the amount of accrued funds in this budget. If such a trend continues, a situation might emerge that the special budget lacks funds to pay out social transfers.