Population control policy in Iran during the 1990s would cause a rapid increase in the elderly population in the coming decades. This fact will lead to a significant financial burden and economic effects. As families' ability and resources to fulfill their demands vanish, governmental support programs to establish higher social welfare for the elderly and their prevention of poverty get higher priority. In this study, the Aurebach-Kottlikoff overlapping generations model is used to simulate the impact of population aging on Iran's economy in a 300-year period based on a social security balanced budget. The driving force of the model is demographic evolution which is exogenous. Based on the UN median population forecast scenario, Iran's population growth rate decreases from 1.2% to 0% by 2040.  
Our results indicate that the population growth rate reduction results in labor supply reduction that would lead to an increase in capital to labor ratio, and thereby a decrease in capital cost, lower interest rate and an increase in wage rates. In addition, a lower population growth rate leads to the young generation paying a higher social security contribution rate and tax. Results show that demographic changes have an impact on welfare priorities. According to these demographic changes, welfare priorities are threatened and create inequality between generations.