In this paper, I study the impact of early life exposure to air pollution caused by the 1997 Indonesian forest fires on cognitive ability, an important determinant of success in the labor market. To isolate the effect of pollution exposure, I use a difference-in-differences approach where exposure to pollution is determined by timing and region of birth. The results suggest that pollution lowered cognitive test score at age 8–9 years by 6 percent. I also estimate how this might translate into lost earnings on a different but comparable sample. The estimates suggest that natural disasters can reduce earnings by 5 to 8 percent by hampering cognitive ability. Lost earnings due to interrupted cognitive development could be an additional cost of exposure to air pollution.

We examine the effect of increased industrial jobs on educational attainment in Vietnam, where WTO accession stimulated a massive increase in foreign direct investment. District-level intensity of jobs in foreign-invested firms is negatively associated with propensity to be in school for all urban teenagers and for rural females. High dropout rates are due in part to access to labor markets offering almost no premium for high school learning. The decision to join the workforce before completing high school will likely have long-term implications for individuals and for aggregate growth because global competitiveness depends on sustained increases in labor productivity.