New Beginnings: The NOx Budget Trading Program and Infant Health.

This paper examines the impacts of the Nitrogen Oxide Budget Program (NBP), a program that created a cap-and-trade market to regulate ozone pollution, on infant health outcomes. I employ the universe of birth records in the US from 1995 to 2008 and estimate how in-utero exposure to the NBP affected infant health using a triple-differences strategy. I find that exposure to the NBP improved infant health. Full exposure to the NBP reduces the incidence of low birth weight and very preterm birth by about 5.5% and 13%, respectively. Heterogeneity analyses suggest larger effects among Black mothers, low-educated mothers, and single mothers. I provide empirical evidence suggesting that endogenous changes in fertility behavior are unlikely to confound the estimates. A series of event studies do not support concerns that the effects reflect pre-existing trends in birth outcomes. Finally, I discuss the economic significance of the results in light of other exposures and their later-life impacts.