Little research has been done to examine discrimination against gays and lesbians in the labor market. Badgett (1995) conducted the only previous study investigating labor market outcomes of gays and lesbians using a random data set. However, due to the structure of the data, the wage differential between heterosexuals and gays and lesbians that is found can not be directly assigned to employer discrimination. Some gays and lesbians might deploy passing strategies to hide their sexual orientation on the workplace which lower their productivity. Consequently, the measured wage differential is a conglomerate of employer discrimination against "out" workers and lower productivity of those employees trying to conceal their sexual orientation. To investigate whether lesbians’ unfavorable labor market outcomes are due to discrimination or result from passing strategies, 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, since it has been suggested that gender non-conformity is one of the reasons why lesbians are disliked, 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.
