ACCOUNTING CAREERS AND INCOME DIFFERENTIALS
William B. Joyce, Ph.D., CPA, CMA, CFA, CCM
Abstract: The accounting profession may differ in its relative attractiveness compared to
other careers to students, and this relative attractiveness may give rise to compensating
income differentials. Such differentials represent equilibrium market outcomes and can
persist until supply or demand conditions in the various job markets change. Examining
the economics of labor supply may provide insight into the career choices students make.
Incomes differ greatly among individuals and among careers. There are three
economic reasons why these income differentials arise. First, people have different levels
of skills. Differences in skills may result some people being more productive than others.
Those people with greater skills will earn higher income, in a competitive labor market.
Second, “monopoly rents” may be essentially earned by people in certain careers. For
example, the Certified Public Accounting Examination’s 150-hour requirement
successfully further limits access to the public accounting profession. Incomes in the
accounting profession may result in higher career incomes for the accounting profession.
Third, incomes may differ across careers because some careers are more pleasant than
others. More enjoyable careers will attract a large supply of applicants, and this may
result in the incomes to be lower than in less desirable careers.
In this paper, attention will be focused on the relative pleasantness of the
accounting profession as cause for income differentials. It is assumed that all people are
equally skilled and that there are not monopolistic elements in the income-setting
process. Income differentials can arise, and this income differential is examined.
Differing Characteristics of Careers
Differing characteristics of careers may lead to differential incomes. The
differential income reflects differences between the advantages