The purpose of this paper is, firstly, to examine the pattern and the employment flow of the manufacturing sector. The focus is on the relative importance of firm entry and exit versus the effects of scale changes in production on employment flow. Secondly, the paper will analysis the industry differences of the labor demand. To do this, the paper further explores the influences and importance of industrial heterogeneity and firm heterogeneity on a firm's demand for workers. The results of this paper enable us to evaluate the employment effects of labor demand policies more precisely than before, and provide a basis for solving existing unemployment problems of the sector.