Partially funded social security and growth

Carlos Bethencourt, Lars Kunze and Fernando Perera‐Tallo

Metroeconomica, 2025, vol. 76, issue 2, 297-310

Abstract: This paper investigates the relationship between economic growth and the degree of fundedness of a social security system in an overlapping generations model with family altruism. It is shown that the relationship between the degree of fundedness and economic growth is inverted U‐shaped so that a gradual increase in funding may harm growth if bequests are not operative within the family. Our findings put some caution on the conventional view that a higher degree of funded social security is beneficial for growth.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bla:metroe:v:76:y:2025:i:2:p:297-310

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