The Opioid Crisis and the Location of Work: Evidence from Online Job Profile Data

Abstract

While growing evidence indicates that the opioid crisis has led to a reduction in local labor supply, whether this decline can be attributable to worker flow in and out of the local area remains unclear. Using over 130 million online job profiles of workers in the US, this paper investigates the effect of the opioid crisis on workers' location choices. Our job profile data capture worker-level job transitions from 2007 to 2019, allowing us to measure the inflow and outflow of workers for every county pair. We use a difference-in-differences design that leverages geographic variation in exposure to the 2010 reformulation of OxyContin, which led to a large transition from prescription opioids to illicit opioids. We find strong evidence that this transition toward illicit opioids resulted in an increased net outflow of workers away from counties more affected by the reformulation relative to those less affected. Moreover, we show that the increase in net outflow is more pronounced among higher-skilled workers, leading to a substantial decrease in the average skill level of the workers in highly exposed areas. Finally, we investigate the economic consequences of the net outflow among high-skilled workers and demonstrate that the reformulation is associated with a decline in local innovation in terms of patent filings and startup formation. Overall, our findings suggest that the opioid crisis adversely affects both the quantity and quality of local labor supply by influencing workers' location choices, eventually leading to a deterioration in the economic prospects of affected areas.

Keywords: Opioid crisis, OxyContin reformulation, Skilled migration, Innovation

JEL Classification: I12, I18, J61, O31