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Is the Rise in Illicit Opioids Affecting Labor Supply and Disability Claiming Rates?

Sujeong Park, David Powell

NBER Working Paper No. 27804
Issued in September 2020
NBER Program(s):Health Economics, Labor Studies, Public Economics

There is considerable interest in understanding the broader effects of the opioid crisis on labor supply and social insurance programs in the United States. This paper examines how the recent transition of the opioid crisis from prescription opioids to more prevalent misuse of illicit opioids, such as heroin and fentanyl, altered labor supply behavior and disability insurance claiming rates. We exploit differential geographic exposure to the reformulation of OxyContin, the largest reduction in access to abusable prescription opioids to date, to study the effects of substitution to illicit markets. We observe meaningful reductions in labor supply measured in terms of employment-to-population ratios, hours worked, and earnings. We also find significant increases in disability applications and beneficiaries. These labor supply and disability insurance shifts begin immediately after reformulation and are uniquely associated with pre-reformulation rates of OxyContin misuse, not rates of broader pain reliever misuse.

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Document Object Identifier (DOI): 10.3386/w27804

 
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