To implement the employment-first policy,it is of great importance to explore the im-pact of firms'pension contribution rates on employment.By constructing an overlapping genera-tions(OLG)model that includes endogenous labor supply and heterogeneous labor,this paper examines the impact of firm's pension contribution rates on employment and the labor skill struc-ture.The theoretical model finds that lowering the pension contribution rates increases the labor supply in the economy,especially the supply of low-skilled labor.Using the CSMAR data during 2007-2019,this paper finds that as pension contribution rates go down,employment increases and the share of low-skilled labor increases,which is consistent with the theoretical predication.The empirical results also show that the pension contribution rates have a greater impact on the employment size of non-state-owned firms.The results of the paper imply that the"tax cut and fee reduction"policy has a positive effect on the employment size of firms,which is stronger for low-skilled workers,and thus helps stabilize and expand employment.