Abstract
This paper investigates the poverty and inequality in urban China during the period of rapid urban reforms. It shows that the incidence of urban poverty declined from 1992 to 1995, but increased from 1996 to 1998, when major urban reforms were launched. The western region has the highest concentration of urban poverty, and the income gap between the region and rest of China has been widening over time. A further decomposition analysis shows that rapid economic growth has been the major force behind reduction in urban poverty, but the poverty reduction impact would have been even greater if worsening income distribution had been avoided.
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