The Impact of Local Labor Market Conditions on Opioid Transactions: Evidence from the COVID-19 Pandemic
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The Impact of Local Labor Market Conditions on Opioid Transactions: Evidence from the COVID-19 Pandemic

Published: Dec 30, 2021
Publisher: Mathematica
Health Opioids COVID-19 Employment
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Associated Project

Workers’ Compensation and the Opioid Epidemic: Analysis and Research Design Options

Time frame: 2018-2021

Prepared for:

U.S. Department of Labor

Chief Evaluation Office

Key Findings
  • The COVID-19 pandemic was a substantial, unexpected shock to employment, but counties varied widely in their vulnerability to job loss due to the pandemic.
  • Worsening labor market conditions led to an increase in opioid transactions relative to what they would have been in the absence of this unexpected shock of the pandemic, though the magnitude of this impact varied by geographic region.
  • This finding has implications for early stages of future epidemics and pandemics that lead to widespread closures of businesses, schools, and government entities. Locations more affected by a contraction in employment might experience a sharp increase in opioid transactions. The increase in opioid transactions could, in turn, increase health emergencies related to opioid misuse and put stress on emergency medical providers.
  • The study measured the employment-related effects of the COVID-19 pandemic on legal opioid transactions, which are likely to be strongly correlated with both medical and nonmedical opioid use as well as overdoses. However, the report findings might be underestimating the effect on overall opioid use including illicit use, which is responsible for a substantial and growing share of opioid deaths in recent years.

This study uses county-level data on employment and opioid transactions from the first quarter of 2018 to the fourth quarter of 2020. To tease out the causal relationship between the changes in labor market conditions associated with the pandemic and opioid use, we implemented a quasi-experimental regression design that takes advantage of (1) the unexpected nature of the pandemic, and (2) cross-county variation in industry composition, which leads to county-level variation in vulnerability to the effects of the pandemic on the labor market. We first constructed a measure of county-level vulnerability to job loss because of the pandemic. We then tested whether counties with larger shares of jobs in the most vulnerable industries had a larger change in opioid transactions after the pandemic relative to counties with lower shares of jobs in those industries. We conducted an analysis of all counties and an analysis by region because data from the Quarterly Census of Employment and Wages (QCEW) suggest the pandemic affected employment in different parts of the country differently over time.

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