Social and economic impact of social security

Social security can be evaluated in terms of its impact on the social sphere (what is the contribution, positive or negative, of social security to social progress?) and the economic (what is the contribution, positive or negative, of social security to growth?). A combined approach to these major issues involves addressing the socio-economic impact of social security

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Researchers debate whether social security programmes can promote or inhibit economic growth, but few empirical studies directly address the overall relationship. Their work addresses the causal impact of social security programmes on factors that lead to economic growth.

While the links are discussed and disputed, both in academic circles and in the political sphere, mixed conclusions emerge from work on four major areas.

  1. As regards the labour market, all branches of social security contribute, each in its own way, to potential incentives and disincentives to economic activity. Social security programmes in this view are increasingly favourable to employment.
  2. In relation to consumption, savings and even investment, social security programmes are designed to support consumption. The consequences of such support in the medium and long term are not clearly defined. The same applies to the connection with savings. By contrast, a new direct function is emerging of investment in productive capital.
  3. In terms of demography, social security undoubtedly has a far-reaching impact on health, which is always positive for growth. Links with fertility are less clear, but having a young, dynamic and educated population is an asset for growth.
  4. With regard to human capital, the linkages are the subject of a body of research but with less detailed conclusions. In any case there clearly appears to be a causal chain between, on the one hand, maintaining and improving human capital through social security and, on the other hand, economic performance.

In these four areas, the impact is not unequivocal. If one focuses here on the consequences of social security programmes, one could also address the consequences of changes in these four major areas for the direction and structuring of social security. Relationships are always reciprocal.

Ultimately, social security should be regarded not only as a cost, but also as an economic investment. In this sense, social security is a social investment, embodying the preventive and proactive dimensions of Dynamic Social Security. The development of social security is hence a tool for global social development, not simply a factor solely affecting economic aggregates.

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