The Impact of Opioids on the Labor Market: Evidence from Drug Rescheduling

The areas most affected by the opioid crisis have witnessed deteriorating economic conditions, although it is unclear if this represents a causal relationship. I provide new evidence on this question by leveraging a natural experiment that sharply decreased the supply of hydrocodone, the most commonly prescribed opioid in the United States, relative to other opioids. Areas with larger reductions in hydrocodone prescribing experienced relative improvements in labor force participation and employment. However, these areas also witnessed higher growth in drug-related arrests. I find some evidence of reductions in illicit opioid deaths, which are offset by increases in other drug-related deaths.