Through digital transformation, traditional enterprises realize the deep integration of digital technology and real economy, which has become an important path to realize high-quality economic development in China. Using the sample of A-share listed companies in Shanghai and Shenzhen from 2010 to 2020, this paper uses text analysis to describe the degree of enterprise digital transformation, and empirically test the labor cost of digital transformation. The research results show an inverted U-shaped curve relationship between enterprise digital transformation and labor cost. After distinguishing different stages of enterprise digital transformation, the study finds that only in the early stage of digital transformation, executive equity incentives and high-tech enterprises will have a moderating effect on the labor cost impact of digital transformation. Further mechanism analysis shows that the labor cost improvement effect in the early stage of enterprise digital transformation is mainly realized through the introduction of high-skilled labor. In addition, the impact effect of labor cost of digital transformation has obvious industry heterogeneity. After a series of robustness tests, such as replacing key variables, excluding corporate strategic disclosure behaviors, using propensity score matching method, and exogenous event shocks, the research conclusions still hold. The policy implications of this study include: Chinese enterprises should formulate forward-looking digital transformation strategic planning, solidly to promote the comprehensive digitalization of enterprise technology and production management mode, and avoid producing short-sighted tendency when facing the pain of transformation in the early stage. Workers should strive to improve their labor quality to adapt the changes in employment environment and labor demand brought about by digital transformation. Governments at all levels should attach importance to labor skill education and digital technology training for low skilled workers to help companies accelerate the process of digital transformation.
