On January 2nd, 2018, Stefano Cascino (London School of Economics) presented his current research topic „Labor Market Effects of Spatial Licensing Requirements: Evidence from CPA Mobility” (co-authored with Ane Tamayo and Felix Vetter, both from London School of Economics) at the WHU Research Seminar in Finance & Accounting.
In their paper the authors exploit the staggered introduction of CPA Mobility provisions in the U.S. to study the effects of spatial licensing requirements on the labor market for accounting professionals. Specifically, they examine whether removing licensing-induced geographical barriers affects CPA wages, employment levels, and the quality of the professional services provided. They find that, subsequent to the adoption of CPA Mobility provisions, wages of accounting professionals decrease by 1.1% on average. The documented effect on wages is more pronounced for states with lower supply of CPAs, for early-adopting states, and for CPAs holding senior positions. Moreover, the authors assess whether increased wage pressure is associated with deteriorating service quality and find no supporting evidence. Overall, their evidence is consistent with the idea that the removal of occupational licensing barriers increases the elasticity of labor supply. Their findings inform the current regulatory debate on occupational licensing.