This paper investigates the interplay between labor market flow and corporate innovation. Leveraging the comprehensive job-to-job transition metric developed by Donovan et al. (2023), we find a negative and significant relationship between labor market flow and innovation, which is robust across various model specifications and endogeneity tests. We also find evidence supporting the labor adjustment cost channel as the predominant mechanism over the knowledge spillover channel, affecting innovation through labor market flow. We further show that the effect of labor mobility varies depending on the type and direction of labor movement, as well as industry characteristics. Our paper contributes to the literature on labor market flow and corporate innovation and holds important implications for firms and policymakers.