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New evidence for opioids’ impacts on employment rates

March 14, 2019
By: Jason Rittenberg

The Federal Reserve Bank of Cleveland has released a working paper that establishes connections between opioid prescription rates and employment rates. The authors use longitudinal data, as well as leveraging the Great Recession as a sort of natural experiment, to provide evidence that opioids not only relate to declining labor force participation, but have likely caused this outcome. Their evidence suggests these impacts are stronger for men without a college education.

A key finding of the report is that of the two percent decline in labor force participation by men in prime working ages since 2006, approximately half of that decline can be attribute to opioid use.

At the root of this impact is evidence that a 10 percent increase in opioid prescriptions corresponded to a five percent increase in unemployment among men, according to one of the authors in a speech explaining the paper.

A natural counter to the authors’ causal argument would be that poor economic conditions encourage opioid use in the first place. The paper pushes back against this argument by showing that while unemployment rates jumped during the Great Recession, opioid use was already spiking by 2007, as seen in Figure 11 of their paper. 

Figure 11

Another insight from the paper is that the economic impact of prescriptions is not limited to white men, which seems to be the predominant frame of much of the media’s attention to the issue. Instead, minorities in high-prescription areas experience even stronger impacts to their employment rates.

Ultimately, the paper provides further support for limiting opioid prescriptions as one means of addressing the current problem. The authors do stress in their conclusion that their research does not indicate any area of the country that appears to have been particularly effective in curtailing opioids from 2006-2016.

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