2019 RDRC Meeting: Is the Rise in Illicit Opioids Affecting Labor Supply and Disability Claiming Rates?

Published: 2019


This paper studies how the transition of the opioid crisis from misuse of prescription opioids to misuse of illicit opioids, such as heroin and fentanyl, is altering labor supply and disability claiming rates. There is widespread interest in understanding the broader effects of the opioid crisis beyond overdoses, especially the effects on labor supply, social insurance programs, and economic conditions. We study the effects of the reformulation of OxyContin, a substantial reduction in the supply of abusable opioids, as a primary driver of the transition from prescription opioids to illicit drug markets. This shock differentially affected areas with high rates of nonmedical OxyContin misuse, and we study the relationship between prereformulation OxyContin misuse with labor and disability outcomes over time. We find that the transition to heroin and fentanyl had little effect on traditional labor supply measures such as labor force participation rates, but that these aggregate metrics mask important behavioral changes for those on the margins of applying for disability benefits. We estimate statistically significant and meaningful increases in disability applications based on prior OxyContin misuse rates. This increase leads to a higher rate of favorable determinations in the population, suggesting downstream effects on the disability insurance system. We do not observe similar effects associated with non-medical pain reliever misuse more generally, implying that the change in disability rates is uniquely associated with OxyContin misuse at the time of reformulation.

Key Findings