Abstract: With the continual downward pressure on China’s economy，how to stabilize employment has become a popular issue． This article takes the payroll tax policy implemented in 2008 as a quasi-natural experiment to capture the exogenous changes of corporate tax burdens，and uses the data of A-share listed companies from 2000 to 2018 and the DID method to study the causality between tax incentives and corporate employment． The results show that the payroll tax policy has brought additional tax incentives and promoted the company’s employment demand． After effectively eliminating common trends，expected effects，policy stacking effects，and reverse causality，this conclusion is still robust． Our heterogeneous test shows that the incentive effect of the policy on corporate employment is more significant in private companies and those companies with weaker cost-passing capabilities，with higher labor intensity，and in more market-oriented regions． In other words，the more sensitive companies are to labor cost changes，the better the effect of the policy． Payroll tax policy significantly improves the performance of companies． The research helps to understand the micro- mechanism of taxation affecting corporate behavior and has important implications for the government to promote employment with taxation policies．

Keywords: Payroll Tax; Corporate Income Tax Ｒate; Corporate Employment; Labor Cost