Improving the mechanism for promoting high-quality and full employment is a major policy decision made at the Third Plenary Session of the 20th Central Committee of the Communist Party of China. The construction of smart cities, through informatization means, optimizes the allocation structure of labor resources, providing a new engine and creating new opportunities for promoting high-quality employment. Based on a sample of A-share listed companies in Shanghai and Shenzhen from 2010 to 2023, this paper empirically examines the impact of smart city construction on labor investment efficiency. The findings reveal that smart city construction significantly improves labor investment efficiency in local enterprises, particularly by curbing over-investment in labor. Mechanism tests indicate that the labor information decision-making effect, data value creation effect, and labor factor matching effect serve as critical transmission channels through which smart city construction enhances labor investment efficiency. Heterogeneity analysis demonstrates that the positive effect is more pronounced in western regions, areas with lower urbanization levels, and regions with less developed digital economies, with greater benefits accruing to traditional enterprises, private firms, companies with lower R&D efficiency, and those facing higher financing constraints. The extended analysis demonstrates that the temporal dimension exhibits both long-term persistence and dynamic evolutionary characteristics, while the spatial dimension manifests geographically-proximate spillover effects, driving coordinated developmental momentum across non-pilot cities within the metropolitan agglomeration. The conclusions of this study provide new explanations and evidence for clarifying the logical relationship between smart city construction and labor investment efficiency, offering insights into addressing the challenges of high-quality employment.