Finance and Economics Discussion Series (FEDS)
Labor Market Effects of the Oxycodone-Heroin Epidemic
We estimate the causal effects of heroin use on labor market outcomes by proxying for heroin use with prior exposure to oxycodone, the largest of the prescription opioids with a well-documented history of abuse. After a nationwide tightening in the supply of oxycodone in 2010, states with greater prior exposure to oxycodone experienced much larger increases in heroin use and mortality. We find increases in heroin use led to declines in employment and labor force participation rates, particularly for white, young, and less educated groups, consistent with the profile of oxycodone misusers. The results show the importance of extending beyond prescriptions when accounting for the labor market effects of the opioid crisis.
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