This study uses both descriptive and econometric methods to analyze rural household income and poverty incidences over time and the drivers of welfare dynamics in rural Kenya. The analysis uses balanced panel data from 1,299 households in rural Kenya collected by Tegemeo Institute of Agricultural Research and Development, Egerton University. The results reveal considerable variation in regional welfare dynamics over time in rural Kenya, but with overall decreasing poverty levels between 2000 and 2007. Welfare dynamics are associated with demographic factors such as household dependency burden, and the gender and educational attainment of household heads. Households with high dependency ratios and those under single-female headship are more likely to to transition into poverty. These... findings underscore the importance of post-secondary education, access to land, physical infrastructure, markets, and drought shocks for the welfare of rural households.