Does population aging matter for remittances in developing countries?

Previous research has paid little attention to how population aging affects remittance flows in developing countries. Using panel data from 80 developing countries from 1996 to 2018, this study explores the impact of population aging on remittances. The system generalized method of moments (GMM) estimations reveal that an increase in the population aging measures of the old-age dependency ratio (% of the working-age population), old-age population ratio (% of the total population), and a composite factor of these two measures hinders remittances, implying that, overall, elderly dependents act as a deterrent to remittance flows in developing countries. Nevertheless, in separate estimations for “low”- and “high”-income countries, they facilitate remittances in the low-income group, wherein the population is mostly less aged, while they restrain remittances in the high-income group, wherein the population is often more aged. The inverse nexus is specifically confirmed by estimations for high-income countries with governmental social security schemes for the elders. These findings suggest that population aging plays a critical role in determining remittance flows, relying on the country’s income level concerning the degree of population aging and the presence of a government social security program for older people.