Existing studies highlight the uncertainty about changes in living standards in China's transition to market economy. Using household data from Jiangsu and Sichuan provinces, we examine the signi®cance of demographic characteristics on rural household welfare which has generally been overlooked in the existing literature. Three sets of results are reported here: (i) estimates of total land allocated per household suggests that household marginal share of land is higher for a resident adult compared to a child or an old and lower for non-resident members or members engaged in non-farm activities. (ii) Regular adjustment of land to changing demographic composition generates a lack of security of tenure in land as well as an impetus for the growth of rural non-farm activities as re¯ected in the estimates of household per capita income and expenditure: an additional resident or non-resident adult, engaged in non-farm activities enhances rural household welfare while an additional child or old member lowers it, which also re¯ects the deterioration in the provision of social services. (iii) Probit analysis of poverty status based on poverty-level income suggests that the poor are likely to be those households with more children or old members and also those primarily depending on farm activities. In a situation of changing demographic patterns and a changing balance between rural farm and non-farm employment prospects, there is a need to identify the poor and the vulnerable adequately so that the latter do not have to bear the brunt of the reform.