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

55 Pages Posted: 18 Mar 2020 Last revised: 22 Feb 2021

See all articles by Hans Lueders

Hans Lueders

Center on Democracy, Development, and the Rule of Law, Stanford University

Micah Mumper

California Department of Insurance

Date Written: February 20, 2021

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.

Keywords: unauthorized immigrants, driver licenses, AB60, auto insurance; insurance uptake; insurance premiums

JEL Classification: J15, G22, K37, R41

Suggested Citation

Lueders, Hans and Mumper, Micah, Licensing the Insured: Providing Driver Licenses to Unauthorized Immigrants Has Not Affected Auto Insurance in California (February 20, 2021). Available at SSRN: https://ssrn.com/abstract=3541901 or http://dx.doi.org/10.2139/ssrn.3541901

Hans Lueders (Contact Author)

Center on Democracy, Development, and the Rule of Law, Stanford University ( email )

Stanford, CA 94305
United States

Micah Mumper

California Department of Insurance ( email )

Los Angeles, CA

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