Endogenous Growth and Social Security
Giancarlo Marini and Pasquale Scaramozzino
Universita di Roma Tor Vergata and SOAS, Univ. of London
This paper examines the effects of social security in a standard endogenous
growth model. It is shown that the introduction of an unfunded balanced-budget
pension scheme could permanently raise the growth rate, after a fall on impact.
Contrary to the commonly accepted view, unfunded social security can lead to
permanently higher capital and output when the supply side dynamics is
characterized by endogenous growth.