Air Pollution and Children’s Cognitive & Non-cognitive Development: Evidence from a Quasi-Natural Experiment

This paper examines the medium-run impact of in-utero exposure to ambient air pollution on children’s cognitive and non-cognitive development. We exploit a sharp decline in ambient air pollution, particularly in SO2, caused by the shutdown of old, high-emitting GDR brown coal power plants and relative wind directions as a source of exogenous variation. Combining administrative records from mandatory school entrance examinations in one major East German state after reunification and detailed data on monthly ambient air pollution allows us to identify the effect of exposure to different pollutants during critical periods of pregnancy. Our early results indicate that a one standard deviation increase in SO2 pollution during week 8 and 25 of pregnancy – the period when the neural systems develops most – increases the probability of a child being diagnosed with special educational needs by 3.4 percentage points. This result is driven by negative effects on children’s cognitive development, not however, on their socio-emotional or physical development.