Bounding causal effects using data from a contaminated natural experiment: Analysing the effects of teenage childbearing

In this paper, we consider what can be learned about causal effects when one uses a contaminated instrumental variable. In particular, we consider what inferences can be made about the causal effect of teenage childbearing on a teen mother's subsequent outcomes when we use the natural experiment of miscarriages to form an instrumental variable for teen births. Miscarriages might not meet all of the conditions required for an instrumental variable to identify such causal effects for all of the observations in our sample. However, it is an appropriate instrumental variable for some women, namely those pregnant women who experience a random miscarriage. Although information from typical data sources does not allow one to identify these women, we show that one can adapt results from Horowitz and Manski (1995) on identification with data from contaminated samples to construct informative bounds on the causal effect of teenage childbearing. We use these bounds to re-examine the effects of early chilbearing on the teen mother's subsequent educational and labour market attainment as considered in Hotz, McElroy and Sanders (1995a, 1995b). Consistent with their study, these bounds indicate that women who have births as teens have higher labour market earnings and hours worked compared to what they would have attained if their childbearing had been delayed.