Occupational Licensing and Accountant Quality: Evidence from the 150-Hour Rule
62 Pages Posted: 6 Jan 2017 Last revised: 23 Mar 2019
Date Written: February 25, 2019
I examine the effects of occupational licensing on the quality of Certified Public Accountants (CPAs). I exploit the staggered adoption of the 150-hour rule, which increased the educational requirements for a CPA license. My analysis shows that the rule reduces the number of entrants into the profession and increases their wage premium. The same premium is enjoyed by grandfathered accountants, suggesting it is not a return to higher quality. Labor market proxies for quality find no difference between 150-hour rule CPAs and the rest. These findings are consistent with the theoretical argument that the rule reduced the supply of new CPAs and increased rents to the profession with little impact on quality.
Keywords: The 150-Hour Rule, Occupational Licensure, CPA Licensure, Screening, Human Capital, Labor Market Outcomes, Hazard Rate Model
JEL Classification: D45, I21, J2, K2, L51, M4
Suggested Citation: Suggested Citation