Publication Date

January 2004

Publication Details

Levy, A and Neri, F, Macroeconomic Aspects of Substance Abuse: Diffusion, Productivity and Optimal Control, Working Paper 04-22, Department of Economics, University of Wollongong, 2004.


This paper deals dynamically with macroeconomic aspects of widespread substance abuse with a reference to illicit drugs as an example. Substance-abuse impedes the productivity of the labour force and subsequently economic growth. The labour force is divided into non-using and therefore fully productive workers, a number of whom are employed by the government in drug-control activities, and drug users who are only partially productive. An efficient management of the nation’s portfolio of workers is taken to be the trajectory of drug-control that maximises the present value of the stream of disposable national incomes.