This paper studies the issues of unemployment and poverty that have been appearing
recently in urban China. It estimates the urban unemployment rate, poverty
rate and income disparity using a new sample survey data set. Meanwhile, it
analyzes the relationship between unemployment and poverty, and the effects
of poverty on urban inequality. The main findings are that: (i) the urban unemployment
rate reached 11.6% in 1999 and was a major cause of urban poverty;
(ii) growing urban poverty is becoming the significant source of worsening urban
inequality; and (iii) migrant households have an increasing influence on urban
poverty and the pattern of urban income distribution. The paper concludes that
urban income distribution has worsened since 1995, and urban unemployment and
poverty are the major factors in this worsening.