IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/27804.html
   My bibliography  Save this paper

Is the Rise in Illicit Opioids Affecting Labor Supply and Disability Claiming Rates?

Author

Listed:
  • 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.

Suggested Citation

  • Sujeong Park & David Powell, 2020. "Is the Rise in Illicit Opioids Affecting Labor Supply and Disability Claiming Rates?," NBER Working Papers 27804, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27804
    Note: HE LS PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w27804.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Achim Ahrens & Christian B. Hansen & Mark E. Schaffer, 2020. "lassopack: Model selection and prediction with regularized regression in Stata," Stata Journal, StataCorp LP, vol. 20(1), pages 176-235, March.
    2. Dionissi Aliprantis & Mark E. Schweitzer, 2018. "Opioids and the Labor Market," Working Papers (Old Series) 1807, Federal Reserve Bank of Cleveland.
    3. Robert Kaestner, 1994. "The Effect of Illicit Drug Use on the Labor Supply of Young Adults," Journal of Human Resources, University of Wisconsin Press, vol. 29(1), pages 126-155.
    4. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    5. Abby Alpert & David Powell & Rosalie Liccardo Pacula, 2018. "Supply-Side Drug Policy in the Presence of Substitutes: Evidence from the Introduction of Abuse-Deterrent Opioids," American Economic Journal: Economic Policy, American Economic Association, vol. 10(4), pages 1-35, November.
    6. Janet Currie & Jonas Jin & Molly Schnell, 2019. "US Employment and Opioids: Is There a Connection?," Research in Labor Economics, in: Solomon W. Polachek & Konstantinos Tatsiramos (ed.), Health and Labor Markets, volume 47, pages 253-280, Emerald Publishing Ltd.
    7. Craig L. Garthwaite, 2012. "The Economic Benefits of Pharmaceutical Innovations: The Case of Cox-2 Inhibitors," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 116-137, July.
    8. Achim Ahrens & Christian B. Hansen & Mark E Schaffer, 2018. "LASSOPACK: Stata module for lasso, square-root lasso, elastic net, ridge, adaptive lasso estimation and cross-validation," Statistical Software Components S458458, Boston College Department of Economics, revised 14 Dec 2020.
    9. Clinton P. McCully, 2014. "Integration of Micro- and Macrodata on Consumer Income and Expenditures," NBER Chapters, in: Measuring Economic Sustainability and Progress, pages 137-179, National Bureau of Economic Research, Inc.
    10. Dan Black & Kermit Daniel & Seth Sanders, 2002. "The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust," American Economic Review, American Economic Association, vol. 92(1), pages 27-50, March.
    11. Andreas I. Mueller & Jesse Rothstein & Till M. von Wachter, 2016. "Unemployment Insurance and Disability Insurance in the Great Recession," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 445-475.
    12. Deiana, Claudio & Giua, Ludovica, 2018. "The US Opidemic: Prescription Opioids, Labour Market Conditions and Crime," MPRA Paper 85712, University Library of Munich, Germany.
    13. Ciani Emanuele & Fisher Paul, 2019. "Dif-in-Dif Estimators of Multiplicative Treatment Effects," Journal of Econometric Methods, De Gruyter, vol. 8(1), pages 1-10, January.
    14. Johanna Catherine Maclean & Justine Mallatt & Christopher J. Ruhm & Kosali Simon, 2020. "Economic Studies on the Opioid Crisis: A Review," NBER Working Papers 28067, National Bureau of Economic Research, Inc.
    15. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 157-206.
    16. Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
    17. Aline Bütikofer & Meghan M. Skira, 2018. "Missing Work Is a Pain: The Effect of Cox-2 Inhibitors on Sickness Absence and Disability Pension Receipt," Journal of Human Resources, University of Wisconsin Press, vol. 53(1), pages 71-122.
    18. David Autor & Nicole Maestas & Kathleen Mullen & Alexander Strand, 2011. "Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants," Working Papers wp258, University of Michigan, Michigan Retirement Research Center.
    19. Michael T. French & M. Christopher Roebuck & Pierre Kébreau Alexandre, 2001. "Illicit Drug Use, Employment, and Labor Force Participation," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 349-368, October.
    20. Joseph J. Sabia & Thanh Tam Nguyen, 2018. "The Effect of Medical Marijuana Laws on Labor Market Outcomes," Journal of Law and Economics, University of Chicago Press, vol. 61(3), pages 361-396.
    21. Kerwin Kofi Charles & Erik Hurst & Mariel Schwartz, 2019. "The Transformation of Manufacturing and the Decline in US Employment," NBER Macroeconomics Annual, University of Chicago Press, vol. 33(1), pages 307-372.
    22. A. Belloni & D. Chen & V. Chernozhukov & C. Hansen, 2012. "Sparse Models and Methods for Optimal Instruments With an Application to Eminent Domain," Econometrica, Econometric Society, vol. 80(6), pages 2369-2429, November.
    23. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, September.
    24. Eric French & Jae Song, 2014. "The Effect of Disability Insurance Receipt on Labor Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 291-337, May.
    25. Jenny Williams & Rosalie Liccardo Pacula & Rosanna Smart, 2019. "De Facto or De Jure? Ethnic Differences in Quit Responses to Legal Protections of Medical Marijuana Dispensaries," NBER Working Papers 25555, National Bureau of Economic Research, Inc.
    26. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    27. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," NBER Working Papers 22452, National Bureau of Economic Research, Inc.
    28. Ariella Kahn-Lang & Kevin Lang, 2020. "The Promise and Pitfalls of Differences-in-Differences: Reflections on 16 and Pregnant and Other Applications," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 38(3), pages 613-620, July.
    29. Mireille Jacobson, 2004. "Baby Booms and Drug Busts: Trends in Youth Drug use in the United States, 1975–2000," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1481-1512.
    30. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    31. Daron Acemoglu & David Autor & David Dorn & Gordon H. Hanson & Brendan Price, 2016. "Import Competition and the Great US Employment Sag of the 2000s," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 141-198.
    32. Kerwin Kofi Charles & Yiming Li & Melvin Stephens, 2018. "Disability Benefit Take-Up and Local Labor Market Conditions," The Review of Economics and Statistics, MIT Press, vol. 100(3), pages 416-423, July.
    33. Michael R Betz & Lauren E Jones, 2018. "Wage and Employment Growth in America’s Drug Epidemic: Is All Growth Created Equal?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1357-1374.
    34. Bogdan Savych & David Neumark & Randall Lea, 2019. "Do Opioids Help Injured Workers Recover and Get Back to Work? The Impact of Opioid Prescriptions on Duration of Temporary Disability," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(4), pages 549-590, October.
    35. William N. Evans & Ethan M. J. Lieber & Patrick Power, 2019. "How the Reformulation of OxyContin Ignited the Heroin Epidemic," The Review of Economics and Statistics, MIT Press, vol. 101(1), pages 1-15, March.
    36. David Autor & Nicole Maestas & Kathleen Mullen & Alexander Strand, 2011. "Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants," Working Papers wp258, University of Michigan, Michigan Retirement Research Center.
    37. MacDonald, Ziggy & Pudney, Stephen, 2000. "Illicit drug use, unemployment, and occupational attainment," Journal of Health Economics, Elsevier, vol. 19(6), pages 1089-1115, November.
    38. Ross Gittell & Jon D. Samuels & Edinaldo Tebaldi, 2017. "The Contribution of Associate's Degree Holders to U.S. Earnings, Labor Quality, Productivity, and Overall Economic Growth," Southern Economic Journal, John Wiley & Sons, vol. 84(2), pages 600-636, October.
    39. A. Belloni & V. Chernozhukov & L. Wang, 2011. "Square-root lasso: pivotal recovery of sparse signals via conic programming," Biometrika, Biometrika Trust, vol. 98(4), pages 791-806.
    40. Abby E. Alpert & William N. Evans & Ethan M.J. Lieber & David Powell, 2019. "Origins of the Opioid Crisis and Its Enduring Impacts," NBER Working Papers 26500, National Bureau of Economic Research, Inc.
    41. Lauren Hersch Nicholas & Johanna Catherine Maclean, 2019. "The Effect of Medical Marijuana Laws on the Health and Labor Supply of Older Adults: Evidence from the Health and Retirement Study," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(2), pages 455-480, March.
    42. Powell, David & Pacula, Rosalie Liccardo & Jacobson, Mireille, 2018. "Do medical marijuana laws reduce addictions and deaths related to pain killers?," Journal of Health Economics, Elsevier, vol. 58(C), pages 29-42.
    43. David Beheshti, 2019. "Adverse health effects of abuse‐deterrent opioids: Evidence from the reformulation of OxyContin," Health Economics, John Wiley & Sons, Ltd., vol. 28(12), pages 1449-1461, December.
    44. Jeffrey B. Liebman, 2015. "Understanding the Increase in Disability Insurance Benefit Receipt in the United States," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 123-150, Spring.
    45. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2018. "The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession," NBER Working Papers 25338, National Bureau of Economic Research, Inc.
    46. Van Zee, A., 2009. "The promotion and marketing of oxycontin: Commercial triumph, public health tragedy," American Journal of Public Health, American Public Health Association, vol. 99(2), pages 221-227.
    47. Keshar M. Ghimire & Johanna Catherine Maclean, 2020. "Medical marijuana and workers' compensation claiming," Health Economics, John Wiley & Sons, Ltd., vol. 29(4), pages 419-434, April.
    48. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," NBER Working Papers 22452, National Bureau of Economic Research, Inc.
    49. David Powell & Rosalie Liccardo Pacula, 2021. "The Evolving Consequences of OxyContin Reformulation on Drug Overdoses," American Journal of Health Economics, University of Chicago Press, vol. 7(1), pages 41-67.
    50. Zarkin, Gary A. & Mroz, Thomas A. & Bray, Jeremy W. & French, Michael T., 1998. "The relationship between drug use and labor supply for young men," Labour Economics, Elsevier, vol. 5(4), pages 385-409, December.
    51. Alan B. Krueger, 2017. "Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Rate," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 1-87.
    52. Ruixuan Jiang & Inyoung Lee & Todd A Lee & A Simon Pickard, 2017. "The societal cost of heroin use disorder in the United States," PLOS ONE, Public Library of Science, vol. 12(5), pages 1-15, May.
    53. Jeff DeSimone, 2002. "Illegal Drug Use and Employment," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 952-977, October.
    54. Harris, Matthew & Kessler, Lawrence & Murray, Matthew & Glenn, Beth, 2017. "Prescription Opioids and Labor Market Pains: The Effect of Schedule II Opioids on Labor Force Participation and Unemployment," MPRA Paper 86586, University Library of Munich, Germany, revised 28 Mar 2018.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Cho & Daniel I. Garcia & Joshua Montes & Alison E. Weingarden, 2021. "Labor Market Effects of the Oxycodone-Heroin Epidemic," Finance and Economics Discussion Series 2021-025, Board of Governors of the Federal Reserve System (U.S.).
    2. Carolina Arteaga Cabrales & Victoria Barone, 2021. "The Opioid Epidemic: Causes and Consequences," Working Papers tecipa-698, University of Toronto, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Cho & Daniel I. Garcia & Joshua Montes & Alison E. Weingarden, 2021. "Labor Market Effects of the Oxycodone-Heroin Epidemic," Finance and Economics Discussion Series 2021-025, Board of Governors of the Federal Reserve System (U.S.).
    2. Ruhm, Christopher J., 2019. "Drivers of the fatal drug epidemic," Journal of Health Economics, Elsevier, vol. 64(C), pages 25-42.
    3. David Wiczer & Amanda Michaud, 2017. "The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks," 2017 Meeting Papers 1459, Society for Economic Dynamics.
    4. David Powell & Rosalie Liccardo Pacula, 2021. "The Evolving Consequences of OxyContin Reformulation on Drug Overdoses," American Journal of Health Economics, University of Chicago Press, vol. 7(1), pages 41-67.
    5. Andersen, Asbjørn Goul & Markussen, Simen & Røed, Knut, 2019. "Local labor demand and participation in social insurance programs," Labour Economics, Elsevier, vol. 61(C).
    6. Furtado, Delia & Papps, Kerry L. & Theodoropoulos, Nikolaos, 2020. "Who Goes on Disability when Times are Tough? The Role of Work Norms among Immigrants," GLO Discussion Paper Series 590, Global Labor Organization (GLO).
    7. Deiana, Claudio & Giua, Ludovica & Nistico, Roberto, 2019. "The Economics behind the Epidemic: Afghan Opium Price and Prescription Opioids in the US," IZA Discussion Papers 12872, Institute of Labor Economics (IZA).
    8. Dionissi Aliprantis & Mark E. Schweitzer, 2018. "Opioids and the Labor Market," Working Papers (Old Series) 1807, Federal Reserve Bank of Cleveland.
    9. David H. Autor & Mark Duggan & Kyle Greenberg & David S. Lyle, 2016. "The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 31-68, July.
    10. Hamish Low & Luigi Pistaferri, 2020. "Disability Insurance: Theoretical Trade‐Offs and Empirical Evidence," Fiscal Studies, John Wiley & Sons, vol. 41(1), pages 129-164, March.
    11. Jeffrey B. Liebman, 2015. "Understanding the Increase in Disability Insurance Benefit Receipt in the United States," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 123-150, Spring.
    12. Johanna Catherine Maclean & Keshar M. Ghimire & Lauren Hersch Nicholas, 2017. "Marijuana legalization and disability claiming," NBER Working Papers 23862, National Bureau of Economic Research, Inc.
    13. Burns, Marguerite & Dague, Laura, 2017. "The effect of expanding Medicaid eligibility on Supplemental Security Income program participation," Journal of Public Economics, Elsevier, vol. 149(C), pages 20-34.
    14. Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
    15. Johanna Catherine Maclean & Lauren Hersch Nicholas & Keshar M. Ghimire, 2017. "The Impact of State Medical Marijuana Laws on Social Security Disability Insurance and Workers' Compensation Benefit Claiming," Working Papers id:12111, eSocialSciences.
    16. Jan C. van Ours, 2006. "Cannabis, cocaine and jobs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 897-917, November.
    17. Gordon B. Dahl & Andreas Ravndal Kostøl & Magne Mogstad, 2014. "Family Welfare Cultures," The Quarterly Journal of Economics, Oxford University Press, vol. 129(4), pages 1711-1752.
    18. Garcia-Mandicó, Sílvia & García-Gómez, Pilar & Gielen, Anne C. & O’Donnell, Owen, 2020. "Earnings responses to disability insurance stringency," Labour Economics, Elsevier, vol. 66(C).
    19. Sabia, Joseph J. & Nguyen, Thanh Tam, 2016. "The Effect of Medical Marijuana Laws on Labor Market Outcomes," IZA Discussion Papers 9831, Institute of Labor Economics (IZA).
    20. Cotti, Chad D. & Gordanier, John M. & Ozturk, Orgul D., 2020. "The relationship of opioid prescriptions and the educational performance of children," Social Science & Medicine, Elsevier, vol. 265(C).

    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:27804. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.