Converting Asset Holdings into Livelihood: An Empirical Study on the Role of Household Agency in South Africa

SummaryThis paper analyzes the complexities of converting assets into livelihood and the role that agency constraints play. Drawing inspiration from the capabilities approach and using household data from South Africa, linkages between assets and agency are identified by decomposing asset endowments’ impact on future livelihood. By employing a method of path analysis akin to early heritability of traits studies, theoretical asset-based studies of chronic poverty are bridged with capabilities literatures. The interaction between assets and agency is shown to be as important as asset-to-asset complementarities. The results have wide ranging policy implications.