Economics of Social Security
                     ECONOMICS OF SOCIAL SECURITY
What is Social Security?
• Social security is a term used to cover government systems that provide 
economic assistance to people who have insufficient means of income. 
This usually means people who are past the age of retirement, differently-
abled, unemployed, survivors, and so on.
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About Social Security
• The social security systems set up by the governments of different 
countries are quite different, in terms of things like coverage offered and 
the criteria for eligibility. There are a lot of nations where social security 
systems are inadequate or non-existent.
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The right to social security
• The right to social security is recognized as a universal fundamental right 
by institutions including the UN. Yet, according to the International Labour 
Organization, only 20 per cent of the world's population has sufficient 
social security coverage, and over half do not have any sort of social 
security at all.
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Social security expenditure
• Europe has the highest social security expenditure at around 25 per cent 
of GDP, and North America is at 16.6%, compared to Africa which has the 
lowest expenditure at 4.3 per cent of GDP.
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Social security in India
• Like several developing countries, India does not have a uniform social 
security system. The closest thing is pension provided through the 
Employee's Provident Fund. There is also the National Pension System 
which allows companies to offer their employees the option to save for 
retirement. 
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The United States Social Security System
• The United States Old-Age, Survivors, and Disability Insurance is their 
social security system, handled by the Social Security Administration (SSA). 
Approximately 1 out of 6 Americans receive social security benefits, and 
for a lot of them, it is the only thing keeping them fed and clothed.
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Economic Effects of Social Security
Savings and Labour Supply
• It is theorized that more generous social security programs decrease the 
incentive for people to accumulate personal savings and reduce the labour 
supply. Social security benefits are often dependent on the assets of a 
person, and this disincentivizes people from saving, especially as workers 
near the age of retirement.
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Distribution of Income
• Social security systems are devised keeping the middle and lower classes 
in mind. Intuitively, it seems like expanding social security systems, 
especially by increasing the taxes of the higher income strata, would go 
towards bringing about a favourable distribution of income. And it would 
with a well-designed system.
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Social Security- Good or Bad for the 
Economy?
• The benefits that social security provides for middle and lower class 
society cannot be ignored. But the matter of if the system is good or bad 
for the economy of a nation is still being contested.
• It could be argued that the different detrimental ways that social security 
adversely affects economic growth are not indicators that social security 
coverage should be reduced, but rather that the system should be 
improved. 
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