Did the Opioid Crisis Dampen Post-Recession Employment Recovery? Evidence from Labor Market Flows

We show that the opioid crisis slows transitions to employment from unemployment and non-participation, implying slower recovery from recessions. We identify the effect of the opioid crisis from cross-state variation in triplicate prescribing regulations, which produced long-lasting reductions in opioid use by reducing the initial distribution of the blockbuster opioid OxyContin. Difference-in-differences estimates show that triplicate regulations induce unemployed and non-participating workers in triplicate states to return to employment about 10 percent faster than workers in non-triplicate states. These estimates imply a 1.1 percentage point higher level of employment in steady state, and faster recovery from negative employment shocks. The protective effects of triplicate regulation appear across demographic groups, with larger effects for those working in physically demanding occupations.