This research employed the 2012 national smart city pilot policy as a quasi-natural experiment, and used a sample of Chinese listed firms from 2009 to 2024 to examine the policy's impact on the labor misallocation index. Using a Difference-in-Differences (DID) model, this research evaluated the impact of smart city development on corporate labor misallocation. The findings reveal the following: First, smart city development significantly reduces firm-level labor misallocation. This key finding is proven to be robust under a battery of empirical validation tests, including placebo tests, propensity score matching combined with DID (PSM-DID), the exclusion of specific time periods, substitution elasticity tests, re-estimation of production functions, and controls for concurrent policy interventions. Second, this mitigation effect is more pronounced in firms located in eastern regions, non-resource-dependent cities, and labor-intensive industries. Third, mechanism analysis indicates that smart city construction exerts its impact by accelerating corporate digital transformation, improving human capital quality, and enhancing employees' subjective well-being and job satisfaction. Finally, based on these empirical results, this research proposes policy recommendations to optimize the role of smart city pilots in labor resource allocation.