Using a variety of recent data sources, the informal sector of urban migrants and its role in China’s economy are examined in this paper. It predicts that in the next several decades the informal sector and informal employment will play the major roles in urban employment of China. It distinguishes the definition of informal sector from those of informal employment and informal worker in formal sector. It argues the positive function of informal employment of urban migrants,and that the informal employment must not be identified with underground or illegal activities. The authors think that current policies towards informal employment sacrifice the benefits of the urban migrants and must be changed. The questionnaire data were obtained in Chaoyang District of Beijing in 2002 from urban residents (N = 504) and urban migrant workers (N = 307), and in Fengtai District of Beijing in 2000 from urban residents (N = 752) and urban migrant workers (N = 493).
