Prescription Opioids and Labor Market Pains: The Effect of Schedule II Opioids on Labor Force Participation and Unemployment

We examine the effect of prescription opioids on county labor market outcomes, using data from the Prescription Drug Monitoring Programs of ten U.S. states and labor data from the Bureau of Labor Statistics. We achieve causal identification by exploiting plausibly exogenous variation in the concentration of high-volume prescribers as instruments (using Medicare Part D prescriber data). We find strong adverse effects on labor force participation rates, employment-to-population ratios, and unemployment rates. Notably, a 10 percent increase in prescriptions causes a 0.53 percentage point reduction in labor force participation, similar to the drop attributed to the 1984 liberalization of Disability Insurance.