Social security, the family, and economic growth

We show that a defined-benefits PAYG social security system distorts key fa mily-based choices that affect economic growth. We identify human capital a s the engine of growth, and the motivating forces linking the family's over lapping generations as mutually productive intergenerational transfers and/ or altruism. The PAYG system is shown to affect adversely at least one of t hree determinants of the economy's growth path: fertility, savings, and inv estment in human capital. The specific effects may vary over different stag es of economic development. The growth rate is expected to fall in advanced economies. Our analysis indicates that the effect mall be sizeable. (JEL 9 15, 111, 850).