Prescription opioids and new business establishments

Abstract

The effects of opioid abuse on health are widely documented, however, its effects on labor market outcomes have only recently become a topic of scientific inquiry. Whereas recent economic studies focus on various measures of labor market participation, the present study analyzes whether opioid prescription rates are associated with the impetus for entrepreneurial activity. By drawing on samples of US counties and US neighbor county-pairs across state borders from the years 2007 to 2016, we find that higher opioid prescription rates are associated with fewer non-employer establishments and new firms employing 1-4 employees. In an ancillary analysis of 50 US states from the years 2006 to 2016, we further show that opioid prescription rates are associated with lower entrepreneurial activity in general and opportunity-based entrepreneurial activity in particular. Overall, both the county-level and state-level analyses show that a higher rate of opioid prescriptions is negatively associated with new business formation. Although the estimated effect sizes are small, they are sizeable in absolute terms.

Economic Studies on the Opioid Crisis: A Review

“…Park and Powell ( 2020) find t hat t he crisis's transition t o i llicit opioids l ed t o reduced l abor m arket engagement, and t o rising rates of disability applications and enrollment. Rietveld and Patel ( 2020) demonstrate t hat additional opioid exposure i s negatively associated with m easures of entrepreneurship and s mall business formation. However, Currie et al (2018) uncover a positive relationship between prescribing and employment-to-population rates among women, but no association among men.…”

Economic Studies on the Opioid Crisis: A Review

“…Park and Powell ( 2020) find t hat t he crisis's transition t o i llicit opioids l ed t o reduced l abor m arket engagement, and t o rising rates of disability applications and enrollment. Rietveld and Patel ( 2020) demonstrate t hat additional opioid exposure i s negatively associated with m easures of entrepreneurship and s mall business formation. However, Currie et al (2018) uncover a positive relationship between prescribing and employment-to-population rates among women, but no association among men.…”