Background The secular decline in labor market participation and the concurrent increase in opioid use in many developed countries have sparked a policy debate on the possible connection between these two trends. We examined whether the use of prescription opioids was connected to labor market outcomes relating to participation, employment and unemployment among the Finnish population.

Methods The working-age population (aged 19–64 years) living in Finland during the period 1995–2016 was used in the analyses (consisting of 67 903 701 person-year observations). Lagged values of prescription opioid use per capita were used as the exposure. Instrumental variables (IV) estimation method was used to identify causal effects, where opioid use per capita for the elderly (65–95-year-old) was used as an instrument for the opioid use per capita for the working-age population of the same gender, education and region.

Results Increased opioid use led to worse labor market outcomes in the long run, with the effect size of 16% and 20%, compared to the standard deviation of the employment and participation rates. On the contrary, in the short run, increased opioid use had positive employment effects.

Conclusions Policymakers should take the contradictory short- and long-term effects into account while considering regulation and monitoring of opioid use. Regulating and monitoring long-term prescription opioids is crucial for reducing their negative labor market consequences.