Relying on the present literature, official statistics, and household survey data in the People’s Republic of
China, this paper summarizes research findings on the relationship between urbanization, urban–rural
inequality, and poverty, and provides further empirical evidence on the role of urbanization and government
policies in urban poverty. Several conclusions can be drawn from. First, urbanization has a significant effect on
reducing both poverty of rural residents and poverty of migrating peasants, and, consequently, has a positive
effect on narrowing the rural–urban income or consumption gap. Urban labor markets play an important role
in this effect. Second, urbanization is positively correlated with urban poverty. This can be explained by the
competition between migrating peasants and urban workers in the labor market, and the failure of the
government’s anti-poverty policies in urban areas. Third, the existence of an informal sector has a negative
effect on the poverty of urban citizens. Being employed by the informal sector significantly increases the
probability of falling into poverty for urban citizens. Fourth, the minimum wage has a positive effect on
reducing urban poverty, while the effect of other policies, such as Di Bao and the minimum living standard, is
limited.