Licensing the Insured: Providing Driver Licenses to Unauthorized Immigrants Has Not Impacted Auto Insurance in California

Abstract

A key argument for providing unauthorized immigrants with driver licenses is that such policies are expected to increase auto insurance uptake and lower premiums. The paper tests this expectation in the context of California's Assembly Bill (AB) 60, which gave about 2.6 million unauthorized immigrants access to driver licenses. Exploiting cross-county variation in the estimated share of AB60 licenses, we find that even though more than one million licenses have been issued under AB60 to date, the policy had no measurable effects on the share of uninsured vehicles or automobile insurance premiums. A power analysis and multiple robustness checks corroborate this conclusion. This result suggests that most newly licensed unauthorized immigrants were already driving an insured vehicle prior to the reform. In a highly car-dependent society, they had no choice but to drive even when it was illegal. Our research provides important insights about the behavior of one of the most marginalized populations in the United States and revisits prominent claims about how to improve auto insurance rates and premiums.