Abstract: Technological innovation and employment stability are of great significance to the high-quality development of China's economy, but technological progress inevitably raises concerns about potential employment problems.Using a quasi-natural experiment produced by the SRDI ‘little giants’ enterprises identification policy, this paper takes China's A-share listed companies from 2015 to 2022 as samples, and explores the effects and mechanisms between the policy and enterprise labor employment by difference-in-difference approach. The paper finds that the identification of SRDI ‘little giants’ enterprises significantly promotes the increase of labor employment, especially in private enterprises and in private enterprises, key industries with higher density of ‘little giants’ enterprises, more competitive industries, and areas with low regional innovation level. Further tests show that tax incentives, bank loans and financial constraint are the main mechanisms．Finally，the increase of labor employment also significantly promotes enterprise human capital structure upgrading and boosts enterprise high-quality development. The results of this paper show that the identification and cultivation of SRDI ‘little giants’ enterprises is an effective policy to promote technological progress and achieve employment growth, which is instructive for optimizing the cultivation policy of small and medium-sized enterprises, stabilizing employment and safeguarding people's wellbeing.