The Opioid Crisis and Firm Skill Demand: Evidence from Job Posting Data

Abstract

While growing evidence suggests that the opioid crisis has reduced employment levels, little is known about how the crisis has affected job skill requirements—tools that employers use to screen job candidates. Using data on the near universe of US job vacancies, this paper studies the impact of the opioid crisis on employers' job skill requirements. Specifically, we investigate the effect of the reformulation of OxyContin, which represents one of the most substantial reductions in the availability of abusable prescription opioids. Prior studies have documented that the reformulation resulted in a large transition from prescription opioids to more dangerous illicit opioids. Using a difference-in-differences event study design that exploits firm-level variation in exposure to reformulation, we show that this transition toward illicit opioids has reduced employment at the firm level. Furthermore, we find that firms have increased requirements for cognitive and computer skills in response to this crisis. Finally, we find that the reformulation has resulted in reductions in local store sales, firm revenue, and firm capital stock, highlighting how the opioid crisis may impact firms' hiring decisions by affecting various aspects of firms' constraints and considerations. Our findings emphasize the distributional consequences of this crisis: less-skilled workers may experience a disproportionate impact from the increased skill requirements, even among workers without a history of opioid use disorders.

Keywords: opioid crisis, OxyContin reformulation, skills, job vacancies

JEL Classification: I10, I12, I18, J21, J24