Is the Rise in Illicit Opioids Affecting Labor Supply and Disability Claiming Rates?

This paper examines how the recent transition of the opioid crisis from prescription opioids to more prevalent misuse of illicit opioids, such as heroin and fentanyl, altered labor supply behavior and disability insurance claiming rates. We exploit differential geographic exposure to the reformulation of OxyContin, the largest reduction in access to abusable prescription opioids to date, to study the effects of substitution to illicit markets. We observe meaningful reductions in labor supply measured in terms of employment-to-population ratios, hours worked, and earnings in states more exposed to reformulation relative to those less exposed. We also find evidence of increases in disability applications and beneficiaries.