Abstract
We examine whether there is a class pay gap in the auditing profession. We explore this question using 20 years of unique administrative data in Sweden, an egalitarian society and top-ranked meritocracy. We document a significant income disparity across all professional levels within Big 6 firms between auditors from higher-and lower-socioeconomic backgrounds (SEB), with the gap peaking at the partner level. We explore two potential underlying mechanisms: differential performance and workplace segregation. While we find no evidence that high-SEB auditors deliver higher quality audits, we find robust evidence of substantial workplace segregation. Higher-SEB CPAs manage larger portfolios and more prestigious clients (indicating horizontal segregation), and are more likely to qualify as CPAs, reach partnership, and join Big 6 boards (indicating vertical segregation). Beyond these disparities in economic and professional achievements, class-based inequality also appears to take a toll on mental health: we find that auditors from lower-SEB backgrounds are significantly more likely to be diagnosed with depression, suggesting that the psychological burdens of the profession fall disproportionately on those from less privileged origins. Collectively, these findings challenge the meritocratic narrative of public accounting and serve as a call to action for audit firms to ensure equal opportunity and address systemic class-based inequalities.