This paper examines the size and trend of urban poverty in China since 1995, especially the relationship between unemployment and the variation of the urban poverty originating rate. The paper is in three parts. The first reviews the background of the incidence of urban poverty in China since 1990s, and considers various contributory factors. The second conducts empirical tests using 2002 panel data of urban household income, separately calculating the Poverty Originating Rate and Poverty Intensity index of sample cities, and uses the probit model to analyze the relationship between the probability of individual's poverty and its family member's unemployment & coming off sentry. The third examines and assesses the impact of government policies (such as by way of compensation). The paper concludes with some suggestions about an urban poverty alleviation policy suited to employment generation.

March 10, 2007.