Abstract The authors estimated the total factor productivity of 268 Chinese cities based on DEA approach and tested the relationship between technical progress, structural readjustment and employment growth. The results indicate that the increase in total factor productivity does not affect urban employment obviously and the quick adjustment of industrial structure has obvious positive effect on urban employment. At the same time, the industries of manufacture and construction are positively related to urban employment while the industries of power, gas and water supply, personal service and production service are negatively related to urban employment. In addition, the research also indicates that human resource and technological input are important factors that promote the employment growth in Chinese cities.