The Labor Supply Consequences of the Opioid Crisis

Labor force participation and employment rates have declined in the United States since the late 1990s. An emerging literature considers the role of the opioid crisis on labor outcomes, suggesting that increased access to opioids may have led to decreased national labor supply. This paper uses the introduction of OxyContin and geographic variation in its launch to study the long-term labor supply consequences of the opioid crisis. I use an event study framework but show, theoretically and empirically, that a standard event study model with covariates can produce biased estimates. I implement a simple modification to this framework to address these biases. The results suggest that the opioid crisis has played a meaningful role in reducing labor supply for the working-age population.