Do Accountants Increase Economic Activity?

Abstract

We investigate whether and how increasing the number of accountants affects economic activity using data from over 1.1 million establishments. Employing Bartik's (1991) method to tackle endogeneity, we find that increasing a county's accounting employment leads to higher gross domestic product, employment, business activity, and wages. Furthermore, accountants incrementally contribute to economic growth relative to business or all other occupations. Improved aggregate economic activity is related to increased job creation and establishment entry, increased small business loans, and productivity gains. We further corroborate our findings by using the 150-credit-hour CPA requirement and the H-1B visa lottery as shocks to accountant employment. Our findings highlight the economic benefits of increasing the number of accountants in the economy.

Keywords: accounting employment, economic growth, labor productivity

JEL Classification: M41, J23, J24, J44, L26