Some newborns' breathing during the first hours of life is more rapid and labored than normal because

of a lung condition called transient tachypnea of the newborn (TTN). About 1% of all newborns develop TTN, which usually eases after a few days with treatment. Babies born with TTN need special monitoring and treatment while in the hospital, but afterwards most make a full recovery, with no lasting effect on growth and development.

About TTN
Before birth, a fetus' lungs are filled with fluid. While inside the mother, a fetus does not use the lungs to breathe all oxygen comes from the blood vessels of the placenta. As the due date nears, the baby's lungs begin to clear the fluid in response to hormonal changes. Some fluid may also be squeezed out during the birth, as a baby passes through the birth canal. After the birth, as a newborn takes those first breaths, the lungs fill with air and more fluid is pushed out of the lungs. Any remaining fluid is then coughed out or gradually absorbed into the body through the bloodstream and lymphatic system. In infants with TTN, however, extra fluid in the lungs remains or the fluid is cleared too slowly. So it is more difficult for the baby to inhale oxygen properly, and the baby breathes faster and harder to get enough oxygen into the lungs.

Causes of TTN
TTN, also called "wet lungs" or type II respiratory distress syndrome, usually can be diagnosed in the hours after birth. It's not possible to detect before the birth whether a child will have it. TTN can occur in both preemies (because their lungs are not yet fully developed) and fullterm babies. Newborns at higher risk for TTN include those who are:

delivered by cesarean section (C-section) born to mothers with diabetes born to mothers with asthma small for gestational age (small at birth)

During vaginal births, especially with full-term babies, the pressure of passing through the birth canal squeezes some of the fluid out of the lungs. Hormonal changes during labor may also lead to absorption of some of the fluid. Babies who are small or premature or who are delivered via rapid vaginal deliveries or Csection don't undergo the usual squeezing and hormone changes of a vaginal birth. So they tend to have more fluid than normal in their lungs when they take their first breaths.