Gender typicality and sexual minority labour market differentials

Sexual minorities experience significant differences in labour market outcomes relative to comparable heterosexuals, with larger differences in earnings than in labour supply. A common explanation of these differences is that they may reflect unobserved differences in masculinity and femininity in the sexual minority population. We leverage data on personality and behaviours in the National Study of Adolescent to Adult Health (Add Health) to test whether controlling for differences in masculinity and femininity through quantitative measures of gender typicality eliminates labour market differentials. While we find evidence that gender typicality does affect labour market outcomes of men and women on average, we find no evidence of a differential effect for gays and lesbians. Controlling for gender typicality does not affect the sexual orientation labour market differentials. The evidence suggests that existing estimates of earnings differentials are not affected by omitted variable bias due to not controlling for gender typicality.