Poverty reduction efforts aim at changing those household characteristics that are judged important determinants of household welfare and poverty status. We model the determinants of poverty for Malawian households by conducting an empirical multivariate analysis of household welfare primarily using data from the 1997–98 Malawi Integrated Household Survey. Using this model to simulate the effects of changes in key household characteristics, we are able to assess the likely impact on poverty of a number of poverty reduction policy interventions. The simulations show that higher levels of educational attainment, especially for women, and the reallocation of household labor away from agriculture and into the trade and services sector of the economy will prove effective in reducing poverty in Malawi.