In this paper we examine poverty concentration in Chinese impoverished neighbourhoods
and estimate the effects of household characteristics and neighbourhood types on social deprivation.
We find that unemployed households in old neighbourhoods are among the most deprived. The
Chinese case suggests that urban poverty is concentrated by particular social groups living in specific
neighbourhoods. We find a small but not insignificant neighbourhood effect on poverty generation in
China. Living in impoverished neighbourhoods increases the probability of becoming poor by a
steady percentage. For every 1% increase in poverty rate, the chance is raised by 4.4%. Living in
old neighbourhoods and being unemployed raises the chance by 4.7 times with demographic and
socioeconomic attributes controlled for. The neighbourhood effect in the Chinese case is linked to
path dependency of institutionally derived inequalities.