Working Paper: NBER ID: w27804
Authors: Sujeong Park; David Powell
Abstract: 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.
Keywords: opioids; labor supply; disability insurance
JEL Codes: J22; H55; I12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Oxycontin reformulation (O30) | Labor supply reduction (J89) |
| Oxycontin reformulation (O30) | Increase in disability applications (J14) |
| Higher pre-reformulation oxycontin misuse (I12) | Greater reduction in labor supply after reformulation (J89) |
| Oxycontin reformulation (O30) | Increase in disability beneficiaries (H53) |
| Oxycontin misuse rates (I12) | Labor supply shifts (J29) |