The Impact of the Opioid Crisis on Firm Value and Investment

74 Pages Posted: 11 Mar 2019 Last revised: 17 Sep 2021

See all articles by Paige Ouimet

Paige Ouimet

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Elena Simintzi

University of North Carolina Kenan-Flagler Business School; Centre for Economic Policy Research (CEPR)

Kailei Ye

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Multiple version iconThere are 2 versions of this paper

Date Written: August 14, 2020

Abstract

The opioid crisis has implications for firms which must now contend with a lower supply of workers. Consistent with a labor shortage explanation, we find a negative effect of instrumented opioid prescriptions on subsequent individual employment. Similarly, we show a negative relationship between opioid prescriptions and subsequent establishment growth. Firms respond to the labor shortage by investing more in technology, consistent with an intent to substitute capital for the relatively scarcer labor. We find positive abnormal returns upon the passage of state laws intended to limit opioid prescriptions, especially for those firms that are more reliant on labor.

Keywords: opioid, firm value, labor supply

Suggested Citation

Ouimet, Paige and Simintzi, Elena and Ye, Kailei, The Impact of the Opioid Crisis on Firm Value and Investment (August 14, 2020). Available at SSRN: https://ssrn.com/abstract=3338083 or http://dx.doi.org/10.2139/ssrn.3338083

Paige Ouimet (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Elena Simintzi

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building, Room 4200B
300 Kenan Center Drive
Chapel Hill, NC 27599-3490
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Kailei Ye

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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