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Title: Employer Drug Screening and Employment Outcomes

Citation Type: Miscellaneous

Publication Year: 2008

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Abstract: Beginning the in 1980s, US employers began drug testing employees and job applicants in large numbers. Today, 50% of employees in the US work for firms that conduct some form of drug testing, and 80% of these screen new hires. This paper investigates the labor market impacts of this large policy change. I incorporate drug testing into a standard Roy model of labor market sorting and derive a limited set of predictions concerning sorting across the testing and non-testing sectors. I then identify three key periods in the life of this policy: an early period in which testing was rare (the pre-period), a transition period, and the current high-testing period (the post-period). Using Current Population Survey microdata spanning 1980 to 1999, I test the models predictions empirically and extend the analysis to dimensions on which the model is silent. Consistent with the models predictions, I find that groups with high use rates are underrepresented in the testing sector prior to testing and that employment of non-users increased in the testing sector following the advent of drug testing. I also find that average log wages fell in the testing sector in the post-period and that they rose in the non-testing sector. Finally, I find a number of large and significant changes in relative labor market outcomes across demographic groups, particularly for youth, minorities, and less skilled workers.

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Authors: Wozniak, Abigail

Publisher: University of Notre Dame

Data Collections: IPUMS CPS

Topics: Other

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