Abstract：Unemployment rates in countries across the world are strongly correlated with GDP.China is an unusual outlier from the pattern, whose official government statistics showabnormally low, and suspiciously stable, unemployment rates relative to its GDP. Thispaper reports estimates of China’s unemployment rate for its local urban Hukou populationusing a more reliable, nationally representative dataset for that populationthan in prior work, and which spans a longer period of history than in the past literature.The unemployment rates we calculate differ dramatically from those suppliedin official data and are much more consistent with what is known about key historicaldevelopments in China’s labor market. The rate averaged 3.7% in 1988-1995, when thelabor market was highly regulated and dominated by state-owned enterprises, but rosesharply during the period of mass layoff from 1995-2002, reaching an average of 9.5%in the subperiod from 2002 to 2009. The rates were even higher when demographiccomposition is held fixed. We can also calculate labor force participation rates, whichare not available in official statistics at all. We find that they declined throughoutthe whole period, particularly in 1995-2002 when the unemployment rate increasedmost significantly. We also find that the impacts of these changes fell most heavilyon the unskilled (women, those with less education, and younger individuals). Finally,estimates of unemployment and labor force participation rates are also provided forall urban residents, including migrants without local urban Hukou, and show the samepatterns of change over time.