Research finds little impact of marijuana legalization on employment

Back in July, I asked what Minnesotans could expect to follow the state’s legalization of marijuana. Looking at the research across a range of outcomes, the answer was “Not much,” except for tax revenues, which do seem to rise appreciably after legalization. Another new paper supports this general finding.

In “The Effects of Recreational Marijuana Legalization on Employment and Earnings,” economists Dhaval M. Dave, Yang Liang, Caterina Muratori, and Joseph J. Sabia note that: “opponents [of legalization] argue that increased marijuana use may diminish motivation, impede cognitive function, and harm health, each of which could adversely affect adults’ economic wellbeing.” Is this true?

First, the authors do find that legalization is associated with a 2–4 percentage point increase in adult marijuana use and that the largest increase in marijuana consumption occurs a year after legalization.

However, looking at “the impacts of recreational marijuana laws (RMLs) on employment and wages,” the authors find:

…little evidence that RMLs adversely affect labor market outcomes among most working-age individuals. Rather, our estimates show that RML adoption is associated with an increase in agricultural employment, consistent with the opening of a new licit market. 

It is important to note, however, that these employment increases are “small.” This appears to be more evidence that the legalization of marijuana will be neither the economic boon that supporters sometimes claim, nor the disaster that opponents often suggest.