Little research has been done to examine discrimination against gays and lesbians in the labor market. Wage regressions have documented lower incomes for gays but repeatedly showed higher incomes for lesbians. The results concerning lesbian women are striking but can be reconciled with the existence of labor market discrimination, however. Problems like sample selection and unobserved heterogeneity–in particular, lesbians’ violation of stereotypical female gender roles–might be responsible for their higher earnings. To investigate whether discrimination against lesbians actually does exist, a labor market experiment is conducted. Job applications of candidates, who are equivalent in their human capital but differ in their sexual orientation, are sent out in response to job advertisements. Furthermore, to test whether increased masculinity affects labor market outcomes, the applicants differ in their perceived gender identity. While results show a strong negative effect for lesbian orientation, gender identity does not have a significant overall impact on hiring chances.
