Social security, social welfare and the aging population

This study examines the effects of pay-as-you-go social security programs i n aging economies when the middle-aged both,educate-their dependent childre n and subsidize the retirement of the old. Using an overlapping generations framework in which agents are three-period lived but timing of death in th e third period is uncertain, we analyze the effects of social security tax schemes, under various demographic assumptions, on capital accumulation,edu cation expenditures, social welfare, and economic growth. We find that in m any cases social security crowds out education, and reduces economic growth and social welfare. JEL classification: D9, H2, I2.