BUSINESS CYCLES AND ADMISSIONS TO SUBSTANCE ABUSE TREATMENT

Abstract

We study the effect of business cycles on admissions to specialty substance abuse treatment using administrative data between 1992 and 2015. We proxy business cycles with the state unemployment rate and apply a panel fixed-effects model. While previous economic research has shown that substance abuse is counter-cyclical, we observe no change in the total number of admissions across the business cycle. However, focusing on average effects misses important heterogeneity. In substance-specific regressions we find statistically significant evidence that heroin-related admissions are counter-cyclical while stimulant-related admissions are procyclical. Our findings add to the literature on business cycles and health. (JEL I1, J2).