Labor Market Impacts of States Issuing Driver Licenses to Undocumented Immigrants

Twelve U.S. states, plus the District of Columbia, have recently enacted measures granting undocumented immigrants access to driver licenses. We exploit the state and temporal variation regarding the issuing of state driver licenses for undocumented immigrants to estimate its impact on these population’s employment outcomes. Using 2013 through 2017 data from the monthly Current Population Survey and its Outgoing Rotation Groups, we find that likely undocumented women increase their labor supply in response to the availability of driver licenses. Those at work raise their weekly hours of work by 5 percent, but endure a 4 percent reduction in their real hourly wages. We find no similar impacts among likely undocumented men –a result consistent with a standard labor supply model predicting a greater response from individuals with a larger elasticity. Additionally, we find no apparent impacts on the labor supply and wages of similarly skilled Hispanic native-born women. At a time when anti-immigrant sentiments are at all-time high, understanding how these policies impact targeted groups and similarly skilled native populations is crucial for maintaining an informed immigration policy debate.