AAA Spark Meeting of the Regions

Why Did Accounting Enrollment Decline in the Last Decade? An Analysis of the Impact of Business Cycles

• In Event: Studying the Accounting Student

Abstract

Accounting enrollments at U.S. colleges and universities decreased substantially from 2011 to 2020. We provide a new explanation for the decrease by investigating the impact of business cycles on accounting enrollment. We hypothesize that accounting enrollments are positively associated with unemployment rates (i.e., countercyclical) because students rationally incorporate the countercyclical nature of the accounting labor market in their choice of college major. Using university-level panel data from 1983 to 2020, we find that unemployment rates are positively associated with the number of students graduating with bachelor’s and master’s degrees in accounting as well as the shares of accounting graduates in the business school and the entire university. Our estimates suggest that the 6.0 percentage point decrease in unemployment rates from 2009 to 2018 explains the majority of the decrease in accounting enrollment over the last decade. We also find that the sensitivity of students’ choices of accounting major to unemployment rates is higher for male relative to female students, and for white relative to ethnic minority students. Further, we find some evidence that the positive association between unemployment and accounting enrollment is stronger in private relative to public universities, and in urban relative to rural universities. Our evidence sheds light on not only the primary cause of the decline in accounting enrollment, but also how to address the decline and maintain a diverse student body throughout business cycles.

Authors

• Thomas Bowe Hansen, Virginia Commonwealth University

• Junwoo Kim, Oakland University

• Jay Junghun Lee, University of Massachusetts Boston