This paper investigates the labor market impacts of a reform that universally lowered the school leaving age from 18 to 16 in Hungary. Using a difference-in-cross-cohort-comparisons approach and linked individual education-employment administrative panel data, we find that the policy led to an increase in the likelihood of dropping out from school and inactivity among individuals aged 16 to 18 but no corresponding increase in employment. Dropouts who were employed predominantly worked in low-skilled occupations. These effects were more pronounced among those from lower socioeconomic status, exacerbating existing inequalities. Our results suggest that the decrease in the school leaving age had adverse effects on school to work transition and did not yield the expected improvements in labor market integration.