Unintended Labor Market Consequences of Teen Driving Restrictions: Evidence from Graduated Driver Licensing Laws

Abstract

Graduated Driver Licensing (GDL) laws, adopted by all U.S. states between 1996 and 2012, impose nighttime driving restrictions and passenger limits on newly licensed teenage drivers to reduce traffic fatalities. While the safety benefits of these laws are well-documented, their effects on teen labor market outcomes remain unexplored. Using a triple-difference design that exploits variation in GDL adoption timing across states and differential exposure by age, I estimate the causal effect of GDL laws on teen employment. I find that GDL adoption is associated with a 4.3 percentage point reduction in employment among 16-17 year-olds relative to 20-24 year-olds. This effect emerges sharply at the time of GDL adoption and persists over the following decade. The results suggest that policies designed to protect teen safety may have meaningful unintended consequences for their labor market entry, with potential implications for skill development and long-run career trajectories. \vspace{0.5em} JEL Codes: J22, J13, R41, I18 \vspace{0.5em} Keywords: Graduated driver licensing, teen employment, labor force participation, traffic safety, unintended consequences