For many adolescents, few rites of passage are as exhilarating as receiving a driver’s license. After all, the license provides them with new opportunities and greater independence. Amid the excitement, it’s easy to look past the fact that driving a car entails a number of risks. At its most extreme, being on the road can be life-threatening — and indeed teen drivers are involved in an alarming number of fatal accidents. In the 1990s, the rate of such accidents in the U.S. prompted a number of states to implement measures aimed at improving safety by limiting teen driving. One notable policy involved a program known as graduated driver’s licensing (GDL), which curtails driving by creating intermediate licensing levels that restrict nighttime driving and limit the number of passengers allowed to accompany a teen driver. Often, these regulations also increase the minimum age at which teenagers could obtain a full-privilege driver’s license.

According to official government data, GDL laws helped reduce the number of teen fatalities in car accidents. What’s less understood, however, is whether the policies had unintended effects on high-school attendance rates. Could GDL laws motivate certain students to leave school by limiting their access to campus? Or, on the other hand, could GDL regulations encourage students to stay in school, by limiting access to nonschool activities? The Philadelphia Fed’s Christopher Severen and co-author Valerie Bostwick study these questions in their paper, “Driving, Dropouts, and Drive-Throughs: Mobility Restrictions and Teen Human Capital.”

They set the scene by describing how teenagers might allocate time between school, work, and leisure. In the absence of GDL laws, some teens might allocate a large amount of time toward jobs and leisure, perhaps going so far as to quit school for the sake of working more and pursuing other nonschool endeavors. This would come at great cost: These teens will have sacrificed the long-term benefits of a high-school diploma. However, GDL laws also limit students’ ability to drive to nonschool activities, potentially reducing dropout rates. The authors create models to measure the likelihood of these two possibilities, aiming to capture the net effect of GDL laws on teen drivers (particularly those who live in states that lack compulsory school-attendance laws). They set out to isolate “the effects of teen mobility restrictions when students have the option to drop out of school.”

Their findings indicate that, on balance, GDL laws contribute to higher educational attainment. By reducing access to nonschool pursuits, GDL laws boost school attendance.

They test the robustness of their results through several exercises, ensuring that their findings are not unduly influenced by factors outside of their models. In one test, they analyze the effects of GDL laws at the school-district level, using a robust national database that tracks all U.S. public elementary and secondary schools. These data allow the economists to control for different demographics within each school district, and thus to test the accuracy of their calculations. The results “confirm our main findings,” they write, “and provide compelling evidence that imposing restrictions on teen mobility maintains high-school enrollment and leads to a significant reduction in high-school dropouts.”

Having studied a broad, nationwide sample of teenage drivers, the authors then look into smaller subsets of teens, sorting by factors such as socioeconomic status and race. Do some socioeconomic groups feel the effects of GDL restrictions more acutely than others? What are the ramifications for teens who, for instance, live in rural areas and rely on automobiles as their only form of transportation? The authors reveal, among other possibilities, that income may play a role. Their evidence suggests that teens from lower-income backgrounds could experience negative effects from GDL laws, increasing the risk of dropping out of school. Their analysis also supports the possibility that higher-income households could benefit from GDL regulations, given the higher availability of transportation options for teenagers in these families.

Adding another layer of nuance to their research, the authors account for different levels of driving restrictions by expanding their model to compare the behavior of teens who have limited driving privileges to the behavior of those who have no privileges whatsoever (as is the case, for instance, in states whose minimum driving age is older than 16 years). Their calculations show that “limiting teen driving access to only the intermediate license level reduces the probability of high-school dropout” in states that don’t enforce compulsory schooling laws.1

Whether looking broadly across the U.S. or focusing on smaller subgroups of teens, the results described in Severen and Bostwick’s study have important implications for policymakers, particularly when they debate regulations that limit teenage driving. As the study shows, such limits come with positive and negative consequences, “offer[ing] a classic economic example of trade-offs in policy design.” By identifying the varied effects of GDL laws, the study suggests that a balance is possible between maintaining access to school and reducing access to nonschool activities. To this end, the paper “provide[s] evidence that GDL laws, through reduced access to leisure activities, improve educational attainment for teens.” Although it may seem like school and work are substitutes for each other (because one increases as the other decreases), the authors find that education improves as a result of reduced access to other, nonwork activities, which may include risky behaviors such as petty theft and the use of illicit drugs.

In their approach to studying the relationship between driving and dropout rates, the authors contribute to a growing number of studies about the influence that policies such as GDL laws have on high-school attendance. For regulators, the stakes are high: Policies that affect teens can have long-term consequences. “By limiting teen mobility,” the authors remind us, policymakers can affect “the monumental decision of whether or not to complete a high-school degree.”

  1. The views expressed here are solely those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
  2. However, when 16-year-olds are prohibited from driving, the dropout rate increases. This suggests that some car access may be beneficial for teens, so long as it's limited.