Using data from a national survey ofChinese manufacturing firms conducted in 2009, the authorsanalyze the impact of implementation of China's 2008labor contract law on the employment of production workers.The authors found that cities with lax prior enforcement oflabor regulations experienced a greater increase inenforcement after 2008 and slower employment growth, andthat this finding is robust to inclusion of a rich set ofcity-level controls and the use of alternative measures ofenforcement effort. Although firms affected by the globaleconomic crisis did not report less strict enforcement ofthe new law, there is evidence that their employmentadjustment was less sensitive to enforcement of laborregulations than firms not affected by the crisis.