Social Security and Sustainable Economic Growth: Based on the Perspective of Human Capital

China’s social security expenditure has rapidly grown during the past decade, and concerns about the impact of social security on productivity and sustained economic growth have attracted attention. Based on Chinese provincial panel data over the period 2007–2016, a threshold model analysis found that the impact of social security on productivity has a “double threshold” on human capital. Using dynamic panel data models and system General Moment Method estimators also found the existence of this threshold effect: When the human capital level is low or high, social security is favorable for sustained economic growth. However, if the human capital level is at the intermediate level, the function of social security is weak. The main conclusions were still valid after we examined the robustness of our results with several methods.