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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.

ISSN 1367-580x.