Effects of Job Displacement on Opiate Demand: Evidence From the Medical Expenditure Panel Survey

Abstract

This thesis uses individual-level panel data from the Medical Expenditure Panel Survey to investigate whether job displacement affects the likelihood that prime-age workers in the United States begin using pre- scription opiates. My results indicate that being laid off has no effect on individuals’ propensity to start using opiates, whereas displacement due to other causes decreases individuals’ probability of beginning to use opi- ates by roughly twelve percent. I find no evidence that the effects of job displacement on opiate use differ by age, race, or pre-displacement occupation category, nor do I find any evidence that post-displacement health insur- ance status is an important determinant of the effect of job displacement on demand for prescription opiates. The results of this study suggest that increases in opiate use associated with county-level labor market shocks are unlikely to be driven by despair-induced increases in demand for drugs among affected workers, but rather place-specific determinants of opiate use correlated with poor labor market conditions.