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 one to four months before the job losses. A loss of 500 jobs corresponds roughly to a decrease of 15–20 g and 16 percent greater risk of low birth weight. Layoffs announced late in pregnancy are most strongly linked to decreased birth outcomes.