The Effects of Recreational Cannabis Access on the Labor Market: Evidence from Colorado

Avinandan Chakraborty, Jacqueline Doremus and Sarah Stith

No 2001, Working Papers from California Polytechnic State University, Department of Economics

Abstract: Recreational access to cannabis may have a positive effect on labor demand due to investments in growing, processing and retail cannabis facilities, and spillovers to interconnected industries such as manufacturing, and leisure and hospitality. Using county-level Colorado data from 2011-2018 and exploiting the variation in the timing of commencement of sale of dispensaries, we test for changes in the unemployment rate, employment and wages, overall as well as in manufacturing, construction, and services. Consistent with an increase in labor demand, we estimate that the sale of recreational cannabis through dispensaries is associated with a 0.7 percentage point decrease in the unemployment rate with no effect on total labor force participation. We also find a 4.5 percent increase in the overall number of employees, with effects concentrated in manufacturing and services. We do not find an effect on average weekly wages overall or by sector. Given the lack of a reduction in labor force participation or wages, negative effects on labor supply are likely limited, in line with the existing literature. The decrease in the unemployment rate, coupled with an increase in the number of employees, indicates that labor demand effects are likely to dominate. Our results suggest that policymakers considering recreational access to cannabis should account for increased employment as a possible outcome.

Keywords: cannabis; marijuana; labor demand; manufacturing (search for similar items in EconPapers)
JEL-codes: J21 J3 K00 R11 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2020
New Economics Papers: this item is included in nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://drive.google.com/file/d/1ji_ExH-URUqEWkIc- ... /view?usp=drive_link First version, 2020 (application/pdf)

Related works:
Journal Article: The effects of recreational cannabis access on labor markets: evidence from Colorado (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpl:wpaper:2001

Access Statistics for this paper

More papers in Working Papers from California Polytechnic State University, Department of Economics
Bibliographic data for series maintained by Matthew Cole (mtcole@calpoly.edu).