ABSTRACT This study investigates the impact of granting driver's licenses to undocumented immigrants on their labor market outcomes and employers' use of benefits as mechanisms to retain workers. First, using data from the American Community Survey, we document an increase in the probability of working in agriculture for likely undocumented workers in states that passed driver's license legislation. Then, by utilizing the restricted version of the National Agricultural Workers Survey, we specifically analyze changes in working hours and wages for undocumented farm workers following the implementation of the policy. We find significant increases in hours and days worked on‐farm, higher wages, especially for low‐skilled workers, and a greater likelihood of employers providing private benefits for undocumented farm workers. Farms also experience increased output in states granting driver's licenses to undocumented workers. Additionally, we also find a lower probability of participating in Supplemental Nutritional Assistance Program benefits after driver's license legislation. These findings suggest that policies enabling driving privileges for undocumented workers not only enhance labor market outcomes but also incentivize labor supply.
Luo et al. (2026) studied this question.