Determinants of subjective poverty in rural and urban areas of South Africa

Abstract: This minor dissertation identifies determinants of household subjective poverty in rural and urban areas of South Africa (SA). Although other studies have widely explored objective poverty and their associated determinants, this minor dissertation extends the investigation from objective poverty to subjective poverty, an issue that has received inadequate attention in South Africa. The empirical analysis, based on the FE-2SLS and Living Condition Survey (LCS), reveals that household size, being male, being married or divorced, having completed primary and tertiary education, are strong predictors of subjective poverty across sub-samples of rural and urban. However, we find the determinants of rural subjective poverty to be slightly different to the determinants of urban subjective poverty. For example, owning a piece of land appears to be important in explaining poverty (statistically significant) in the rural sample, in contrast to the urban sample. Moreover, we find that health and unemployment variables are strong predictors in the urban sample, while they are not significant in the rural sample. The results of this thesis have important and broader implications for policy intervention. It suggests that land is still an important component of diverse livelihoods for rural people and can assist rural emerging farmers who want to be involved in large-scale farming.M.Com. (Development Economics