Spillover Effects of Opioid Abuse on Skilled Human Capital and Innovation Activity

We document effects of the opioid epidemic on the migration and output of skilled workers who drive corporate innovation. Exploiting geographic variation in opioid abuse unrelated to economic conditions and using both patent and home sales-based measures, we show that inventors and research labs exit affected areas. This displacement is accompanied by declines in the quantity and value of patents of approximately 7% and $10.6 million per year, respectively. Declines in school quality, safety, and other amenities drive the out-migration. Because displaced workers are unlikely to abuse opioids, our results represent spillover effects of opioid abuse on nonusers. This paper was accepted by Camelia Kuhnen, finance. Funding: The project received funding from the University of Kansas’s General Research Fund and Troesh Center Research Grants from the University of Nevada, Las Vegas. Terry-Sanford Award at the University of Georgia. Supplemental Material: The internet appendix and data files are available at https://doi.org/10.1287/mnsc.2023.02976 .