Impact of air pollution on birth outcomes: Causal evidence from India

India consistently ranks among the countries with the highest levels of ambient air pollution worldwide. At the same time, it faces significant challenges in neonatal health, with newborns having low birth weights which have been shown to have long-term impacts on health and labor market outcomes. Using data from the Indian Demographic and Health Survey (DHS), we examine the impact of in-utero exposure to particulate matter (PM2.5) on birth outcomes. We exploit quasi-random variation in wind direction as an instrument for in-utero particulate matter exposure for each child. We find that reducing in-utero PM2.5 exposure by one standard deviation would lead to a 1.1% increase in average birth weight and reduce the incidence of low birth weight (LBW) and very low birth weight (VLBW) births by 2.9 and 0.7 percentage points, respectively. We extend our analysis to examine potential nonlinear effects of pollution exposure on birth outcomes. While we find no evidence of heterogeneous effects across different pollution thresholds, our results indicate that pollution disproportionately affects individuals in the lower tail of the birth weight distribution, with no impact at the upper tail.