Employment Shocks and Demand for Pain Medication

Declining economic opportunity is often portrayed as one of the drivers of the opioid epidemic. Better employment conditions can, however, affect opioid use through two channels: increasing physical pain from working or reducing mental distress that can contribute to substance abuse. I use a large dataset of opioid and over-the-counter (OTC) painkiller sales to measure the effect of employment shocks on demand for pain medication. To separate the channels, I contrast the effect of labor demand shocks on the use of opioids with the effect on the use of OTC painkillers---which address pain but not mental health---allowing for the effects to depend on the injury rate of local industries. I find that a 1 percent increase in the employment-to-population ratio decreases the per-capita demand for opioids by 0.20 percent, while it increases the per-capita demand for OTC painkillers by 0.14 percent. To decompose the effect of employment on opioid use in the two channels, I calculate the substitution between these pain medications, exploring the introduction of a policy that increased requirements to prescribe opioids. My findings show that during local economic expansions, the decline in opioid abuse is 40 percent larger than the total effect on use while, at the same time, the demand for pain relief medication increases and is related to jobs in high injury industries