Occupational Licensing and Minority Participation in Professional Labor Markets
ANDREW G. SUTHERLAND, MATTHIAS UCKERT, FELIX W. VETTER
Journal of Accounting Research · 2024 · Volume 62 · Issue 2
Abstract
We examine the staggered adoption of additional educational requirements (“150-hour rule”) for Certified Public Accountants (“CPAs”) to understand the effects of occupational licensing on minority participation in professional labor markets. The 150-hour rule increased the educational requirement 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 CPA candidates. Our analyses of parental income and financial aid availability point to a socioeconomic 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 CPA quality following enactment.
Keywords
occupational licensing, labor markets, CPAs, diversity and inclusion, regulatory capture, accounting quality
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