Sexual identity and the lesbian earnings differential in the U.S.

Two decades of research on wage differentials by sexual orientation uses data-sets that do not ask respondents about their own sexual orientation, even though sexual identity is key to theories that explain why a wage differential might exist. We show that many women who claim a lesbian identity for themselves are not classified as lesbian by researchers using the behavioral proxies typically available in the data. Conversely, many women who describe themselves as heterosexual are classified as lesbian because they report sexual experiences with women. Misclassification may lead to erroneous conclusions about changes in labor market outcomes. The results highlight the need to develop robust methods for collecting data on sexual identity and for more research on the interrelationship between sexual identity and behavior, especially occupational choice.