Labor Market Effects of Spatial Licensing Requirements: Evidence From CPA Mobility

100 Pages Posted: 12 Mar 2018 Last revised: 14 Oct 2020

See all articles by Stefano Cascino

Stefano Cascino

London School of Economics

Ane Tamayo

London School of Economics & Political Science (LSE)

Felix Vetter

University of Mannheim

Date Written: October 13, 2020

Abstract

We exploit the staggered introduction of CPA Mobility provisions in the United States to study the effects of spatial licensing requirements on the labor market for accounting professionals. Specifically, we examine whether the removal of licensing-induced geographic barriers affects CPA wages and employment levels, as well as the pricing and quality of professional services. We find that, subsequent to the adoption of CPA Mobility provisions, wages of accounting professionals decrease, whereas employment levels are unaffected. The documented wage effect stems from smaller CPA firms, is more pronounced for CPAs holding senior positions, and persists over time. We also find that service prices decline and that this effect is concentrated in local CPA firms. Moreover, we document that the increased wage and price pressure is not associated with deteriorating service quality. Collectively, our results suggest that the removal of occupational licensing barriers has sizable effects on labor supply and service prices. Our findings inform the current regulatory debate on occupational licensing.

Keywords: Occupational Licensing, CPA Licensure, CPA Mobility, Labor Market Outcomes, Auditing

JEL Classification: D45, J20, K20, L51, M41, M42

Suggested Citation

Cascino, Stefano and Tamayo, Ane Miren and Vetter, Felix, Labor Market Effects of Spatial Licensing Requirements: Evidence From CPA Mobility (October 13, 2020). Available at SSRN: https://ssrn.com/abstract=3136685 or http://dx.doi.org/10.2139/ssrn.3136685

Stefano Cascino (Contact Author)

London School of Economics ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)20 7955 6457 (Phone)
+44 (0)20 7955 7420 (Fax)

HOME PAGE: http://www.lse.ac.uk/accounting/people/stefano-cascino

Ane Miren Tamayo

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)20 78494689 (Phone)

Felix Vetter

University of Mannheim ( email )

L 7, 3-5
Mannheim, 68161
Germany

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