Occupational Licensing and Accountant Quality: Evidence from the 150-Hour Rule

62 Pages Posted: 6 Jan 2017 Last revised: 23 Mar 2019

See all articles by John Manuel Barrios

John Manuel Barrios

Washington University in St. Louis - Olin Business School

Date Written: February 25, 2019

Abstract

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

Barrios, John Manuel, Occupational Licensing and Accountant Quality: Evidence from the 150-Hour Rule (February 25, 2019). Becker Friedman Institute for Research in Economics Working Paper No. 2018-32, Available at SSRN: https://ssrn.com/abstract=2893909 or http://dx.doi.org/10.2139/ssrn.2893909

John Manuel Barrios (Contact Author)

Washington University in St. Louis - Olin Business School ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

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