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Cleveland Fed’s updated research on opioids and the labor market accounts for geographic variation, shows evidence on reverse causality

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Cleveland Fed researchers Dionissi Aliprantis, Kyle Fee, and Mark Schweitzer have updated their study on the opioid epidemic’s impact on labor markets with new analysis that accounts for geographic variation in both short-term and long-term economic conditions.

Among the findings detailed in the revised working paper:

  • The modelling approaches find a range of statistically significant and economically substantial results for both prime-age men and women.
  • A 10 percent higher local prescription rate is associated with a decrease in the prime-age labor force participation rate of between 0.15 and 0.47 percentage points for men and between 0.15 and 0.19 percentage points for women, depending on the control strategy.
  • A short-term unemployment shock did not increase the share of people misusing prescription opioids and that prescription levels vary substantially within quintiles of longer-term labor market performance.

Our new research affirmed our previous results, while adding new evidence supporting the causal interpretation that higher opioid prescriptions depress local labor market outcomes, say the researchers. In particular, we provide evidence that prescription rates are not a reflection of pre-existing weaker economic conditions in localities.

Read more: Opioid and the Labor Market

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