Effect of State and Local Sexual Orientation Anti-Discrimination Laws on Labor Market Differentials

Abstract

This paper presents quasi-experimental research examining the effect of both local and state anti-discrimination laws on sexual orientation on the labor supply and wages of lesbian, gay, and bisexual (LGB) workers. To do so, we use the American Community Survey data on household composition to infer sexual orientation and combine this with a unique panel dataset on state and local anti-discrimination laws. Leveraging variation in law implementation across localities over time and between same-sex and different-sex couples, we find that anti-discrimination laws significantly narrow gaps in labor force participation and employment for men in same-sex couples relative to men in different-sex couples, and also increase their percentile rank in the wage distribution. Our analysis reveals mostly null effects for female same-sex couples; however, in metropolitan areas these laws significantly reduce their employment compared to women in different-sex couples. One explanation for the reduced labor supply is that female same-sex couples begin to have more children in response to the laws. Finally, we present evidence that state anti-discrimination laws significantly and persistently increased support for same-sex marriage. This research shows that anti-discrimination laws can be an effective policy tool for reducing labor market inequalities across sexual orientation and improving sentiment toward LGB Americans.