The Effects of the Opioid Crisis on Employment: Evidence from Labor Market Flows

Abstract

We show that the opioid crisis slows transitions to employment from unemployment and non-participation. We identify the effect of the opioid crisis from cross-state variation in triplicate prescribing regulations, which produced long-lasting reductions in opioid use by reducing the initial distribution of the blockbuster opioid OxyContin. Difference-in-differences estimates show that triplicate regulations induce unemployed and non-participating workers in triplicate states to return to employment about 10 percent faster than workers in non-triplicate states. These estimates imply a 1.1 percentage point higher level of employment in steady state.

Keywords: labor market flows; recession recovery; opioid regulation

JEL Classification: J21, E24, K32, E61, E71