VAT reform across the country in 2009 provides us an opportunity to test whether firms with different property characteristics behave differently on labor demand． Our research finds that，generally，the capital-labor substitution effect is greater than the income effect，and there is an overall decline in corporate labor demand． Meanwhile，private enterprises experience a strong decline in labor demand while state-owned enterprises’labor demand has not been reduced due to the presence of soft budget constraints，therefore，stateowned enterprises are less sensitive to the reform than private enterprises and the difference is statistically significant．In addition，central SOEs significantly reduce labor demand，while the demand of the local SOEs have not been reduced due to the intervention of local governments，so local SOEs are less sensitive to the reform compared to central SOEs． Furthermore，since state-owned enterprises，especially local SOEs，satisfy more labor demand，they have received more government subsidies in return．