Abstract
This paper examines the urban-rural disparities in savings for South African households. The study used data sourced from the National Income Dynamics Study (NIDS) observed from 2008-2017, covering all the five waves segregating the data into the different and unique localities. The study applied a novel two-stage, least square estimation technique to address possible endogeneity problems, which might have plagued previous studies in this field. It was concluded from the study that across samples (urban-rural) the driving factors were different. We found that the coefficients of most variables, such as employment status and household income, are the same in terms of the direction of the impact which is positive but differ in terms of their significance and magnitude across the samples. The results revealed that the coefficients for some control variables were stronger in the urban samples than in the rural sample, for instance. Household size, employment status and household income. And are positively correlated with savings. Although there was a positive correlation between income and savings across samples, the income impact on savings was higher in absolute values for the urban sample as opposed to their counterparts in rural areas. The study recommends that the government should design and implement policies that foster job creation and low-skilled jobs, which generate more income and reduce unemployment.