Abstract: Based on a private enterprise sample in China, we made use of Difference in Difference method to study the impacts of 2008 Labor Contract Law on the private firms' performances. Compared with micro enterprises, we found that the Labor Contact Law significantly promoted the small and medium private enterprises' annual sales per capita; these effects were more significant in non-foreign trade and poor management small and medium firms. At the same time, we found the evidences that the law didn't cause firms to hire more temporary workers to control the labor costs. On the contrary, the decline of the hiring and firing caused by the law might impel private firms to adjust their human capital strategies and invest more in training which would improve the firms' performances.

Key words: employment protection law, private enterprises, economic performance, 2008 Labor Contract Law