Drinka Peković

Higher School of Business Studies, Novi Sad

Serbia

drinkapekovic@yahoo.com

The effects of remittances on poverty alleviation in transition countries

Abstract. This paper examines the impact of remittances on poverty measures in transition economies using the panel data for the sample of nine countries in the period of 2002-2013. LSDV (Least Squares Dummy Variable) model with panel-corrected standard errors is used for estimation of remittance effects. The results show that remittances have a significant impact on each of the three poverty measures. Taking into consideration the endogenous regressor problem, a 10-percent increase in remittances per capita will lead to a decline, on average a 4.7 percent in poverty headcount, and also 5.2  percent in poverty depth and 5.8 percent in poverty severity. These results can be important for defining the policy measures on providing more efficient management of remittances.

Received: July, 2017

1st Revision: August, 2017

Accepted: November, 2017

DOI: 10.14254/2071-

8330.2017/10-4/2

JEL Classification: F24, I32, C23

Keywords: remittances, poverty, transition countries, panel data analysis