The Impact of Social Security Contributions on Renewable Energy Investment in OECD Countries: The Role of Technological Innovation

With the growing global emphasis on the transition to green energy, understanding the drivers of renewable energy investment (REI) has become a critical area of research. However, the role of social security contributions (SSCs) as a fiscal instrument influencing REI remains unexplored. This study examines whether SSCs stimulate renewable energy investment and assesses the extent to which innovation influences this relationship. Using newly compiled SSC data for 35 OECD countries over the period 1996–2022, the analysis applies the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) framework to capture dynamic effects and cross-country dependence. The results show that both social security contributions and technological innovation promote REI. In addition, technological innovation strengthens the positive impact of social security contributions on clean energy investment, indicating that SSCs are effective in innovative OECD economies. The results suggest that policymakers in OECD countries should allocate a significant portion of SSC revenues to green energy initiatives and innovation. Furthermore, increasing investment in green energy research and development could strengthen the link between SSCs and innovation, thereby accelerating the clean energy transition.