Abstract
This paper examines an effect the remittances have on poverty alleviation of rural households and regions in which exist a large number of the emigrants among population. Remittances represent a significant part of additional income of the household mostly used for consumption and improvement of the living standard. Using data from Living Standards Measurement Survey 2007, an impact of the remittances on the poverty index, depth of poverty and poverty severity in the Republic of Serbia is estimated. Due to limitation of data, counterfactual household consumption is estimated in conditions of remittances absence, where the last is treated as exogenous transfer of money. The results show that remittances have a larger impact to poverty of rural households, especially to the depth and severity of poverty. According to the regions, remittances have the largest impact to the poverty level in East Serbia, but these effects on poverty depth and severity are not statistically significant. The smallest changes in the depth and severity of poverty are noticed in Sumadija.