The Opioid-Labor Dynamic: Examining the Effect of Prescription Opioids on Labor Force Participation Among Prime-Age Workers

Abstract

Linking state-level opioid prescription rates to individual-level weighted observations from the CPS, I estimate the effects of prescription opioids on labor force participation. From 2006 to 2012, when opioid prescription rates increase by 8.9 percentage points, a negative, significant effect on labor force participation among the prime-age population is estimated. However, in contrast to the early literature surrounding prescription opioids and labor market outcomes, I find that opioids have a positive, significant effect during periods of declining prescription rates. From 2006 to 2017, I estimate that the 13.7 percentage point decrease in opioid prescribing rates is responsible for 22% of the observed decline in the labor force participation rate within the prime-age population. Accounting for potential endogeneity by exploiting plausible exogenous variation in the differences between cross-state prescribing behavior, I similarly find that the model estimates a significant, positive effect for the general prime-age working population. These findings suggest that when prescription rates are at a healthy, normalized level, prescription opioids can have a positive effect on labor force participation among the prime-age population.