Purpose
– The purpose of this paper is to examine the impact of international remittances on different household welfare indicators including child education, assets, durable goods, and reservation wages of other working age household members. It examines how international remittances are spent for production and consumption by receiving households.

Design/methodology/approach
– This paper uses fixed-effect regressions to estimate the impact of international remittances on household spending in Vietnam using Vietnam Household Living Standard Surveys 2006 and 2008.

Findings
– It is found that most of international remittances are spent on housing and land, debt repayment and saving. A small proportion of remittances are used to buy durable goods. Remittances are not spent in production as well as living consumptions. The effect of international remittances on consumption-based poverty is very limited.

Originality/value
– The findings from this paper suggest that current international remittances are not an effective measure for poverty reduction in the short-run in Vietnam.