Household formation, poverty and unemployment - The case of rural households in South Africa
In recent years increasing attention has been paid to intrahousehold dynamics. Numerous interesting questions arise, such as the importance of bargaining power of household members for resource allocation across members and activities, the differential impact of female versus male pension recipients on the household labour force participation rate or on the educational and health outcomes of children living in the household. This focus on the functioning of household units seems to be justified, as many of the important components of well-being are determined within the household. It is hence beneficial to complement the conventional analyses at the household level by looking inside the "black-box". However, the models generally treat household size and composition as exogenously determined variables. If the household is an important determinant of individual welfare, the question that arises is: what determines the household size, composition and living arrangements in the first place? Such analysis has so far received relatively little attention in a developing country context, though of considerable interest. Firstly, household size matters when constructing measures of poverty. Much of the poverty analysis takes place at the household level where all of the household members are classified either as poor or non-poor, depending on the average income per capita. That is, the total household income is divided by the number of (adult equivalent) household members. As poverty measures are sensitive to the number of people in the household, changes in the size of the household may potentially be as much of a driving force in pushing a household below the poverty line as an income shock or loss of employment.