The Effects of Physician Prescribing Behaviors on Prescription Drug Use and Labor Supply: Evidence from Movers in Denmark [JOB MARKET PAPER]

Laird_JMP.pdf1.47 MB


Health is an increasingly critical determinant of labor supply as the population ages and as a growing fraction of labor force participants develop chronic conditions. Prescription drugs to control pain and mental health disorders have the potential to raise labor supply, but abuse of and addiction to some drugs (such as opioids) could work in the opposite direction. Thus, physician prescribing tendencies could impact patients’ ability to work. In this paper, we estimate the impacts of physicians with differential prescribing behaviors on patient prescription drug use and labor market outcomes for the four classes of prescription drugs used most frequently to treat musculoskeletal and mental health disorders: opioids, anti-inflammatories, anti-anxiety drugs, and anti-depressants. We use Danish administrative data on the full population of the 1925 to 1980 birth cohorts and link information on individual’s prescription drug use, their primary care physicians, municipality of residence, and labor market outcomes from 1995 to 2013. We exploit quasi-random separations of individuals from their physicians associated with geographic moves across municipalities to estimate the causal impact of physician prescribing rates on individual prescription drug use and labor market outcomes. We find that having a general practitioner who has a 10 percentage point higher opioid prescription rate leads to a 4.5 percentage point increase in the probability an individual uses prescribed opioids, as well as a (significant) 1.2 percentile decrease in their labor income rank and a 1.5 percentage point decrease in their labor force participation. Changes in physician prescribing rates lead to similar changes in prescription drug use for the other classes of prescription drugs, but they are not associated with any discernible effect on labor market outcomes.

Last updated on 11/22/2016