Oct 10, 2018

Medical innovation improves not just health but labor market outcomes

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An interesting study from Garthwaite 2012 examines  the removal of Cox-2 inhibitors.  Rather than measuring the direct effect of Cox-2 inhibitors on quality of life or health status, Garthwaite examines how this removal affected labor market outcomes.

Despite dramatic improvements in medical technology, little attention has been paid to the role of these innovations in improving economic outcomes. This study estimates the labor supply effects of Cox-2 inhibitors, a widely prescribed class of pharmaceuticals used for the treatment of chronic pain and inflammation and primarily marketed under the brand names Vioxx, Celebrex, and Bextra. This paper exploits the removal of Vioxx from the market in 2004 as an exogenous change in drug use. This removal was associated with a 0.35 percentage point decrease in overall labor force participation and $19 billion in lost wages.

This example demonstrates how innovative treatments not only improve patients health, but these health improvements can also have large impacts on the economy as well.


  • Garthwaite CL. The economic benefits of pharmaceutical innovations: The case of cox-2 inhibitors. American Economic Journal: Applied Economics. 2012 Jul;4(3):116-37.


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