• China;
  • income distribution;
  • migrant;
  • poverty;
  • urban unemployment

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.