Women who worked eight months of pregnancy had babies on average around half a pound lighter than those who stopped work between six and eight months, researchers at the University of Essex found.
The study, which drew on data from three major studies, two in the UK and one in the US, found the effect of continuing to work during the late stages of pregnancy was equal to that of smoking while pregnant.
Babies whose mothers worked or smoked throughout pregnancy also grew more slowly in the womb.
Past research has shown babies with low birth weights are at higher risks of poor health and slow development, and may suffer from multiple problems later in life.
Stopping work early in pregnancy was particularly beneficial for women with lower levels of education, the study found – suggesting that the effect of working during pregnancy was possibly more marked for those doing physically demanding work.
The birth weight of babies born to mothers under the age of 24 was not affected by them continuing to work, but in older mothers the effect was more significant.
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The researchers identified 912 children whose mothers were part of the British Household Panel Survey, which was conducted between 1991 and 2005.
A further sample of 17,483 women who gave birth in 2000 or 2001 and who took part in the Millennium Cohort Study was also examined and showed similar results, along with 12,166 from the National Survey of Family Growth, relating to births in the US between the early 1970s and 1995.
One of the authors of the study, Professor Marco Francesconi, said the Government should consider incentives for employers to offer more flexible maternity leave to women who might need a break before, rather than after, their babies were born, adding that babies with low birth weights tended to cost the state more money later on.
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He said: "We know low birth weight is a predictor of many things that happen later, including lower chances of completing school successfully, lower wages, and higher mortality. We need to think seriously about parental leave, because – as this study suggests - the possible benefits of taking leave flexibly before the birth could be quite high."
The study findings also suggest that British women may be working for longer during pregnancy. Some 16 per cent of mothers questioned by the British Household Panel Study, which went as far back as 1991, worked up to one month of the birth, compared with 30 per cent of those in the Millennium Cohort Study (MCS) whose subjects were born in 2000 and 2001.
The study is published in the July edition of the Journal of Labour Economics.