JSIT19-01: The Effects of Opioids on Labor Market Outcomes and Use of Social Security Disability Insurance

Prescription opioids are widely used to treat pain. They can be beneficial by helping a person with a medical condition to manage pain and to be gainfully employed rather than seeking Social Security Disability Insurance (SSDI). On the other hand, opioids are addictive; their use may lead to substance abuse and an exit from the labor market. This study examines the effects of prescription opioids on labor market outcomes and the use of SSDI. Studying the effects of prescription opioids on the labor market and the use of SSDI is difficult because workers who are prescribed an opioid medication may be different from those who are not. For example, the former may have more severe medical conditions that prevent them from working and increase the likelihood of successfully applying for SSDI. This potential selection bias would overstate the effects of opioids. To address this bias, this paper uses marketing payments from opioid manufacturers and distributors to physicians as an instrument that can predict opioid prescribing without being correlated with confounding factors such as health conditions.