The A-share data of listed companies in China from 2009 to 2016 are selected as the research samples. The relationship between the rising cost of labor and R&D investment in different types of enterprises is discussed. The empirical results show that there are significant differences in the impact of rising labor costs on R&D investment in different types of enterprises. Compared with capital intensive enterprises, the R&D expenditures of labor intensive enterprises affected by rising cost of labor is more remarkable, and there are significant differences. In addition, this paper also explores the impact of financing constraints and corporate cash holdings on the relationship between labor costs and R&D investment. The results show that the financing constraint restrains the driving effect of the rising labor cost on the R&D expenditure of the enterprise, while the cash holding capacity of the enterprise has promoted the driving effect to a certain extent. By connecting economic theory with enterprise finance, this paper explores the relationship between industrial upgrading and financial situation of enterprises, which can enrich the theoretical literature of the substitution of production factors in the economic field from the theoretical level, which can provide empirical reference for the different types of enterprise industry upgrading decisions in China in the transitional period.