Air pollution from different sources has many consequences on the society especially in the developing countries. One of these consequences is the adverse impact on physical health of the people in the form of different diseases borne due to emissions from these sources which imposes both direct cost i.e. monetary cost as well as indirect cost (by reducing productivity in the future). These emissions not only affect physical health but also cognitive abilities of children living in polluted areas. This study estimates the impact of PM10 emitted from brick kiln on the children’s cognitive abilities. Results showed that the level of PM10 was higher i.e 247 µg/m3 in the brick kiln area (within 3 km radius) compared to 63 µg/m3 in the unaffected area (away from 3 km). Using Raven-test scores to measure the cognitive skills of children aged 5-12 year, this study examines the impact of distance from brick kilns, treatment area and PM10 on cognitive abilities of children. Results show that the cognitive ability of children living in treatment (affected area) was significantly lower by 0.93 SD compared to unaffected children. Similarly, an increase of one µg/m3 in the value of PM10 reduces the cognitive ability by 0.006 SD. Consequently, using back of envelope calculation, we find that these children in the affected areas are likely to experience a reduction of around 20 percent in future wages due the detrimental effect of brick kiln pollution on their cognitive development. Supervisor:- Dr Muhammad Nasir