The purpose of this paper is to determine the key variables that affect urban and rural living standards and hence poverty, as well as to identify the factors that explain the existing poverty differences between rural and urban households in Cameroon. Moreover, since incidence of poverty is higher in rural than in urban areas, the study investigates whether this is due to the existence of endowments of inferior quality in rural areas or to low productivity of these endowments. The results of the study indicate that human resources, as well as social and physical capital, play a major role in the improvement of welfare. The study reveals a certain number of demographic effects in urban and rural areas, of which the most significant is caused by household size, which contributes to the reduction of household consumption expenditures. Moreover, the regions where the households reside also affect consumption expenditures and poverty. There are also significant differences in the occupations of household heads. Those who work in the services sector and trade are better-off than those working in the other sectors of the economy.