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This paper explores the psychological responses to lay-off in contemporary China during its economic reform period. The paper adopts both quantitative and qualitative research methodologies. A total of 287 laid-off workers from state-owned enterprises were surveyed and 26 of them were interviewed in China. The survey data were analysed using statistical methods to detect relationships between variables, and the interview data were processed by means of constructing categories of description and illustrated through the voices of the laid-off workers. This research overturns the conventional wisdom of the three-stage theory, �shock, distress and fatalism�, developed by Western scholars. It demonstrates that the psychological responses of the laid-off workers are highly variable, and culturally and institutionally specific. The implications are both profound and able to underpin a far more constructive and fruitful programme for retraining unemployed workers in China and other developing countries and integrating them into the workforce.
