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

55 Pages Posted: 7 Oct 2021 Last revised: 16 Apr 2023

See all articles by John Manuel Barrios

John Manuel Barrios

Washington University in St. Louis - John M. Olin Business School; National Bureau of Economic Research

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Date Written: October 2021

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 increases the educational requirements for a CPA license. The analysis shows that the rule decreases the number of entrants into the profession, reducing both low- and high-quality candidates. Labor market proxies for quality find no difference between 150-hour rule CPAs and the rest. Moreover, rule CPAs exit public accounting at similar rates and have comparable writing quality to their non-rule counterparts. Overall, these findings are consistent with the theoretical argument that increases in licensing requirements restrict the supply of entrants and do little to improve quality in the labor market.

Suggested Citation

Barrios, John Manuel, Occupational Licensing and Accountant Quality: Evidence from the 150-Hour Rule (October 2021). NBER Working Paper No. w29318, Available at SSRN: https://ssrn.com/abstract=3935506

John Manuel Barrios (Contact Author)

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

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National Bureau of Economic Research ( email )

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