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Labor market effects of spatial licensing requirements: evidence from CPA mobility

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  • Cascino, Stefano
  • Tamayo, Ane
  • Vetter, Felix

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.

Suggested Citation

  • Cascino, Stefano & Tamayo, Ane & Vetter, Felix, 2020. "Labor market effects of spatial licensing requirements: evidence from CPA mobility," LSE Research Online Documents on Economics 107054, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:107054
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    File URL: http://eprints.lse.ac.uk/107054/
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    References listed on IDEAS

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    More about this item

    Keywords

    occupational licensing; CPA licensure; CPA mobility; labor market outcomes; auditing;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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