Occupational licensingand minority participation in professional labor markets

Sutherland, Andrew G. ; Uckert, Matthias ; Vetter, Felix W.

DOI:	https://doi.org/10.1111/1475-679X.12518
URL:	https://onlinelibrary.wiley.com/doi/10.1111/1475-6...
Additional URL:	https://www.researchgate.net/publication/376461182...
Document Type:	Article
Year of publication:	2024
The title of a journal, publication series:	Journal of Accounting Research
Volume:	62
Issue number:	2
Page range:	453-503
Place of publication:	Hoboken, NJ
Publishing house:	Wiley Blackwell
ISSN:	0021-8456 , 1475-679X
Publication language:	English
Institution:	Business School > Accounting & Taxation (Juniorprofessur) (Vetter 2020-)
Subject:	330 Economics
Classification:	JEL: J24 , J44 , K2 , L51 , M40 , M41 , M42,
Keywords (English):	occupational licensing , labor markets , CPAs , diversity and inclusion , regulatory capture , accounting quality
Abstract:	We examinethe staggered adoption of additional educationalrequirements (“150-hour rule”) for Certified Professional Accountants (“CPAs”)to understand the effects of occupational licensing on minority participation in professional labor markets. The 150-hour ruleincreased the educationalrequirement for CPAs from 120 to 150 credit hours, effectively adding a fifth year of study. We find a 13% greater entry decline following the requirement’s enactment for minority than nonminority CPAcandidates. Our analyses of parental income and financial aid availability point to a socio-economic status channel explaining the differential entry declines. Studying exam passing patterns,professional misconduct, and job postings we find a deterioration, or at best, no change in CPAquality following enactment.