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

Author

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  • John M. Barrios

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

  • John M. Barrios, 2021. "Occupational Licensing and Accountant Quality: Evidence from the 150-Hour Rule," NBER Working Papers 29318, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29318
    Note: CF LE LS POL
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    Cited by:

    1. Conor Norris, 2024. "Is reform contagious?: The diffusion of universal recognition reforms," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(4), pages 1214-1232, December.
    2. Clara Augustin & Daniel Gutknecht & Cenchen Liu, 2025. "Staggered Adoption DiD Designs with Misclassification and Anticipation," Papers 2507.20415, arXiv.org, revised Dec 2025.
    3. Reinstein, Alan & Kaszak, Steven E., 2024. "Addressing the shortage of accountants: Suggestions for academe and the profession," Journal of Accounting Education, Elsevier, vol. 66(C).
    4. Choi, Bong-Geun & Choi, Jung Ho & Malik, Sara, 2023. "Not just for investors: The role of earnings announcements in guiding job seekers," Journal of Accounting and Economics, Elsevier, vol. 76(1).
    5. Krupa, Nicholas, 2024. "The licensing and certification roles of the CPA license in the gig economy," Advances in accounting, Elsevier, vol. 65(C).
    6. Ben Posmanick & Alex Obie & Bobby Chung, 2024. "Licensed Professionals and Corporate Board Performance: The Effect of the Sarbanes-Oxley Act on the Audit Committee," Working Papers 2024-03, University of South Florida, Department of Economics.
    7. Nan Li, 2025. "Labor market peer firms: understanding firms’ labor market linkages through employees’ internet “also viewed” firms," Review of Accounting Studies, Springer, vol. 30(1), pages 384-435, March.
    8. Breuer, Matthias & Le, Anthony & Vetter, Felix, 2023. "Audit mandates, audit firms, and auditors," Working Papers 333, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    9. Armstrong, Christopher & Kepler, John D. & Samuels, Delphine & Taylor, Daniel, 2022. "Causality redux: The evolution of empirical methods in accounting research and the growth of quasi-experiments," Journal of Accounting and Economics, Elsevier, vol. 74(2).
    10. Ortín-Ángel, Pedro & Sundgren, Stefan & Millán, Ana, 2025. "CPA exam score and auditors’ salaries," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(2).
    11. Su, Zhifang & Wang, Haowei & Pan, Yinghao, 2025. "Risk education and tax aggressiveness: Evidence from China's auditor certification reform," China Economic Review, Elsevier, vol. 93(C).
    12. Frank Weikai Li & Baolian Wang, 2025. "The gender effects of COVID: evidence from equity analysts," Review of Accounting Studies, Springer, vol. 30(2), pages 1683-1715, June.
    13. Thomas Bourveau & Janja Brendel & Jordan Schoenfeld, 2024. "Decentralized Finance (DeFi) assurance: early evidence," Review of Accounting Studies, Springer, vol. 29(3), pages 2209-2253, September.
    14. Jenny Xinjiao Guan & Emily Shafron & Kangtao Ye & Wenzi Zhuang, 2025. "Is accounting the English language of business? The role of language in IFRS adoption and information loss," Review of Accounting Studies, Springer, vol. 30(3), pages 2963-3020, September.

    More about this item

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • K2 - Law and Economics - - Regulation and Business Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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