Since the second half of the 1990s economic restructuring in urban China has led to
widespread joblessness and income insecurity. The rapid expansion of the system of social
assistance, Di Bao, can be understood from this perspective. Using a survey covering large
parts of urban China in 2002, we investigate factors affecting receipt and how receipt affects
urban poverty. Results from estimating probability models indicate that social assistance
receipt is strongly linked to joblessness among household members, the household’s
expenditure burden, as well as the lack of financial assets. Further, a long education of the
household head and membership in the Communist Party reduces the probability of receiving
social assistance while having been sent to rural China during the Cultural Revolution
increases it. For some types of households, receipt of Di Bao differs greatly across cities in
China. The social assistance payments appear strongly targeted to the poor. However, as the
Di Bao payments typically are small and many of the urban poor are not receivers, much
urban poverty remains.