This article investigates causes and characteristics of urban layoff and unemployment. Chinese statistics show that the worsening urban unemployment problem is mainly caused by China's institutional changes, sectoral shifts, and cyclical fluctuations. Workers who are middle-aged, less educated, and female have experienced a higher risk of being laid off and unemployed. This article also discusses policy issues of China's urban layoff and unemployment. Supply-side policies include those that expand education, establish job-training programs, limit massive rural-urban migration in the short run, and rationalize labor force participation rate. Demand-side policies aim to create jobs, including policies such as promoting the service industry, attracting foreign investment, and developing the nonstate economy. Copyright 2003 Western Economic Association International.
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