Radical economic restructuring in the 1990s resulted in massive layoffs in China's state sector. Protests by SOE laid-off workers reached its peak in 1999, but puzzlingly abated despite increasing popular contentions in recent years. Why have laid-off workers, despite their enormous size as a social group, their huge losses in economic reform, and their displayed strength in confrontations with state authorities in the 1990s, failed to become a leading group in China's increasing social protests and instead become pacified over the years?

Through policy tracing of seven welfare programs and fieldwork in Sichuan Province, this dissertation seeks to examine how two decades of welfare reform have affected the mobilization power of laid-off workers. Three interplaying mechanisms, either intended or unintended results of welfare reform, explain laid-off workers' pacification.

The market ideology strengthened at the first stage of welfare reform (1980 to 1996) results from the transformed relationships between and among the state, enterprises, and individuals. Individualist approach characteristic of reform at this stage has changed the role of the state from a direct welfare provider to a regulator. Such change contributes to diverting workers' target of blame for layoffs from the state to the management of individual enterprises at the later stage.

Strong state intervention at the second stage of welfare reform (1997 to 2004) fragments laid-off workers internally through its age-related benefit packages. Early retirement and higher benefits of pension relative to other programs fulfill the socialist social contract and appease the most vocal group among the laid-off. Active labor policies further divide laid-off workers into those able to relocate jobs and those unable. Livelihood-guarantee arrangements make mobilization even harder, both emotionally and operationally. Furthermore, great public sympathies won by state intervention deprive workers of social soil for further mobilization.

Finally, declining profitability of the state sector reduces workers‘ bargaining power accordingly. In sum, lack of a common target of blame, weakened capacity to mobilize, and public support for authorities explain laid-off workers‘ pacification in the late 1990s.