In this paper, the effects of social security in a simple model of endogenous growth with alternative motives of having children are analyzed. It shows how the effects of social security depend on the size of the social security tax, the motive to have children, and the pattern of intergenerational transfers. The pattern of intergenerational transfers itself, however, is shown to change with the social security tax rate. When the social security tax is not too high, social security increases per capita income growth and tends to enhance welfare.
free text keywords: Economics and Econometrics, Welfare, media_common.quotation_subject, media_common, Endogenous growth theory, Social security, Tax rate, Economics, Labour economics, Per capita income, jel:H55, jel:O41