Spillover Effects of the Opioid Epidemic on Labor and Innovation

Using two independent exogenous shocks, we investigate whether the opioid epidemic affects labor and innovation even when personal addiction is not the main driver. Exploiting a setting of corporate innovation where production is mostly generated by white-collar individuals - unlikely addicts - we first find that county-level increases in opioid abuse cause declines in innovation. Second, legislations limiting opioid prescriptions lead to increases in innovation. A plausible channel is that star-young inventors relocate to counties that suffer less from the epidemic. Finally, the opioid epidemic is more detrimental for firms when employees’ input to innovation and firm growth are important