Association for Public Policy Analysis & Management

This study examines the behavioral effects of No Pass, No Drive policies – a group of low cost negative incentive policies that tie teen enrollment and/or attendance in school to the ability to receive and maintain a driver’s license. Extending the empirical framework and results of Kennedy (2017) and Barua and Vidal-Fernandez (2014, 2017), this paper studies how traffic fatalities, teen employment, and teen births are affected by these policies. Using difference-in-differences estimation, exploiting the variation in timing of the enactment of No Pass, No Drive policies, we are able to identify the causal effect of these policies on teen behavioral outcomes. Policies in 20 states that require both enrollment and attendance increase school retention, particularly in the 9th and 10th grades, without increasing the probability of graduation. We find that these policies cause a reduction in teen-involved fatal traffic accidents by 3 percent, with larger effects for white teens (15 percent). We show this effect is caused by the revocation of licenses, as the reduction in fatal traffic accidents is constant during and outside of school hours, and is larger (12 percent overall) in later years as enforcement technology improved. Additionally, these policies cause a small increase in teen births, with large effects on black teen births (6 percent) and hispanic teen births (21 percent). These policies also cause a shift in teen employment -- overall teen employment rates are not affected, but white teen employment decreases as a result of a 1 percentage point increase in white school enrollment. This causes a 5 percentage point increase in black teen employment due to new jobs opened up by white teens attending school instead of working. The results of this paper are important to policymakers, as it is the first to study how No Pass, No Drive policies affect these teen behaviors. Of potentially more importance are the links we draw between education, teen driving, and teen behavioral outcomes. Our results demonstrate that increasing school retention and decreasing teen drivers' licenses reduces fatal traffic accidents and increases teen births, and our results provide suggestive evidence of existing racial frictions in youth labor markets, which can be reduced by lowering dropout rates.