Abstract: The existing literature suggests that rising labor costs can promote the innovation behavior of enterprises, and this conclusion is primarily based on the sample of enterprises above designated size, it is difficult to draw rising labor costs for the differentiated impact of different types of businesses. Based on strictly stratified random sampling data of CEES that contains samples of different sizes and using the speed of launching new products as proxy variable of innovation, the empirical analysis showed that impact of rising labor costs on the enterprise innovation behavior varies between enterprises of different sizes: large enterprises accelerate innovation and small-and-medium enterprises innovation has not found significant change. The lack of skilled labor, insufficient investment in vocational training and weak innovation capital base is the main reason, for which SMEs has failed to speed up innovation.
Key Words: Enterprise innovation; Rising labor costs; SMEs; Difference analysis