The Effect of Recreational Marijuana Policy on Workplace Absence

Abstract

A near majority of states have now passed recreational marijuana laws (RMLs), but their impact on labor market behavior remains unclear. This study provides new causal evidence on the relationship between RMLs and workplace absence. Leveraging a generalized difference-in-differences framework to exploit the staggered rollout of RMLs, I first document that state adoption of RMLs with recreational dispensaries generates a 50% increase in the rate of prior-month adult marijuana use in treated states relative to control states. Next, I show that RML adoption with dispensaries leads to a 9% increase in the incidence of prior-week workplace absence. Supplemental analyses of health outcomes support a mechanism consistent with these findings, revealing increases in self-reported physical and mental health problems and declines in general health and exercise following legalization. These findings suggest that marijuana legalization may affect labor market outcomes along margins not typically captured by employment status alone.

Publication
SSRN Working Paper #5263799

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