The transition and post-transition processes in Mongolia since 1989 have brought work insecurity to Mongolia. This research aimed at understanding diverse and complex urban livelihoods which emerged after the collapse of socialism, the evolving labour market, and increased migration. Despite its age, the Harris-Todaro model of migration is still a useful framework for understanding “excessive” migration in Mongolia. In Mongolia, people have been responding demographically,economically and socially to the changes in the political and economic system. We discover Mongolia has moved from dependent socialism (on FSU/Russia) to dependent capitalism (on China) since 1989 creating new forms of macro-economic imbalance. For the research, we conducted a household survey which covers 2,145 persons aged 12 and above in three urban locations in Mongolia. In order to study diverse and complex livelihoods, persons aged 12 and above were identified according to workers status (employed, unemployed, non-workers and potential workers) and migration status (in/return, out/potential and circular). In order to study both informal employment and informal sector, based on ILO guidelines, we also developed a classification on status in employment for Mongolia, and classification of production units for Mongolia. Based on employment status, employed persons are categorized as formal labourers, informal labourers and informal business workers. We found that there was movement of labour to informal retail trade sector during the transition in Mongolia. Since 1989, Mongolia has not only suffered from formal unemployment but also seen the creation of a new category of “potential workers”, who are missed in official statistics. In our survey, we revealed the proportion of potential workers in Mongolia, for the first time. Potential workers risk amortization of their human capital and a descent into human misery and non-sustainable livelihoods following longperiods without work. Also potential workers tend to be potential migrants with implications for the stability of the society in their places of origin. Also we found that informal sector has two characteristics in the open market system in Mongolia: combining better income with greater insecurity.