Fear Itself : The Effects of Distressing Economic News on Birth Outcomes

I use new administrative data on mass layoffs and plant closings to study the effects of distressing economic news. Exposure to stressful events during pregnancy can impair fetal development. I find that announcement of impending job losses leads to a transient decrease in the mean birth weight within the firm’s county 1–4 months before the job losses. A loss of 500 jobs corresponds roughly to a decrease of 15–20 grams and 16 percent greater risk of low birth weight. Further analyses show that the initial effect results from curtailment of gestation, while slower intrauterine growth plays a later role