Technological Investment and Accounting: A Demand-Side Perspective on Accounting Enrollment Declines

Abstract

Recent years have seen a stark decline in business school undergraduates majoring in accounting. We help explain this decline by empirically showing that technological development, and corporate software investment in particular, is associated with lower employment and wage growth for accounting majors than for other business majors, especially finance. Accounting majors with a technology minor fare better, while older workers fare worse, on average. As the wage gap between finance and accounting majors grows, fewer students subsequently choose an accounting major and more choose a finance major. Our evidence is consistent with recent theories of technologies having both labor-saving and labor-augmenting effects, and in which these effects vary across jobs and workers and affect human capital investments.

Keywords: JEL Classification: M41, M42, J24, J44, G30, O33 accounting, finance, technology, automation, labor markets

JEL Classification: M41, M42