Local Public Resources and Innovation : Evidence from the Opioid Crisis

Local opioid abuse reduces net worker inflows, taxable income, high skilled labor, corporate and aggregate innovation, new business creation, and job growth from start-ups in affected areas, holding socioeconomic conditions constant. Changes in house prices, parks and recreation expenditures, and dollar store establishments indicate a decline in local resources and amenities as a channel for these negative effects of opioid abuse on human capital and innovation. Our results are robust across diff-in-diff and IV identification strategies. We conclude that local public health problems drain local resources, drive out talent, and lead to long-term reductions in innovative capacity in affected communities