Abstract
How does medical innovation affect labor supply? We analyze how the availability of Cox-2 inhibitors, pharmaceuticals used for treating pain and inflammation, affected the sickness absence and disability pension receipt of individuals with joint pain. We exploit the market entry of the Cox-2 inhibitor Vioxx and its sudden market withdrawal as exogenous sources of variation in drug use. Using Norwegian administrative data, we find Vioxx’s entry decreased quarterly sickness absence days among individuals with joint pain by 7–12 percent. The withdrawal increased sickness days by 12–16 percent and increased the quarterly probability of receiving disability benefits by 6–15 percent.
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