This background paper for "The Chronic Poverty Report 2008-09: Escaping Poverty Traps" examines whether urban markets work for the urban poor and chronically poor in developing countries. It does this by reviewing whether and how the urban chronically poor are engaged in, or excluded from, markets. Care is needed in how we articulate and conceptualise ‘markets’ and ‘market distortions’ as urban markets are often a mix of informal and formal relationships, based not just on economics but also mediated by complex socio-cultural and political dimensions that are developed over time. This means that we need to look at the varied markets that poor people use in urban settings. It is also important to ask whether the poor experience any adverse impacts of market engagement and not only see markets as sites of opportunity. There may be instances in which markets in fact reproduce chronic poverty in urban settings. Impacts may be felt in both the immediate and longer term. Thus, we ask what tangible and intangible benefits do markets provide the urban chronically poor?