The State's Response to the Crisis of Neoliberalism: A Comparison of the Net Social Wage in China and the United States, 1992-2017

Neoliberalism and the Social Wage in the U.S. and China

PERI researcher Katherine Moos and Hao Qi compare the welfare states and taxation regimes of the two largest economies in the world, China and the United States, from 1992 to 2017. They focus on each country’s net social wage, which they define as the difference between total benefits received by and taxes paid by labor. They find that the net social wage has increased over time in both countries, but that the patterns reflect distinctly different political circumstances in the two countries, due to their specific historical trajectories in the neoliberal era.

Abstract

We compare the welfare states and taxation regimes of the two largest economies in the world, China and the United States, from 1992 to 2017. We begin with a comparison of each country’s net social wage—that is, the difference between total benefits received by and taxes paid by labor—using two established methods. While the net social wage in the two countries exhibited similar trends, the increasing net social wage has distinctly different implications in the two countries due to their specific historical trajectories in the neoliberal era. In the US, the increasing net social wage reflects an ambivalent and reluctant response to workers’ social reproduction. In China, it reflects institutional changes in the welfare state, which we interpret as the Chinese state’s attempt to resolve the social-reproduction crisis caused by neoliberal reforms of the 1990s.

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