The effect of social security expenditure on saving in Turkey

Social security; humanity's need for it has emerged since the early ages and has gradually become widespread among countries, evolving into a significant budget transfer item for national economies over time. Social security policies, especially with the industrial revolution, have undergone major changes. In subsequent times, various social security practices have been implemented based on the economic, social, and demographic structures of countries. However, with the economic crisis that emerged in the 1970s, countries have reevaluated their social security policies and embarked on reform movements. Nowadays, social security policies implemented among countries vary. In this study, the impact of the social security system in our country on domestic savings has been investigated. The study includes a time series analysis covering the period from 1975 to 2020. Initially, ADF and FADF tests were applied. According to the FADF test results, F-statistics were found to be insignificant for all three variables. Therefore, the ADF test was applied. According to the ADF unit root test results, the variables were made stationary in their first differences. After that, the Maki Cointegration test was conducted to determine the long-term relationship between the variables. According to this test, the existence of a long-term relationship was identified, and the years 1988 and 2010 were observed as breakpoints. After detecting the long-term relationship, long-term coefficients were calculated. Accordingly, a 1% increase in social security expenditures increases savings by approximately 1.5%, and a 1% increase in the unemployment level increases savings by 1.6%. In the final section of the analysis, the causal relationship between the variables was investigated. For this purpose, according to the results of the frequency domain causality test, causality was identified only at a 10% significance level, specifically from social security expenditures to savings. Finally, the test results were evaluated, and constructive suggestions were presented.