Fluidity in Sexual Identity, Unmeasured Heterogeneity, and the Earnings Effects of Sexual Orientation

Using data drawn from the National Longitudinal Study of Adolescent Health, this study (1) examines the sensitivity of the estimated earnings penalty of sexual minority status to family-level unobserved heterogeneity, and (2) explores whether the earnings effects of sexual orientation differ by the degree of fluidity in individuals' self-reported sexual identity over time. Evidence from sibling pairs suggests that unobserved family heterogeneity is not an important source of bias in the estimated relationship between sexual orientation and young adult earnings. I find that gay males and bisexuals earn lower wages than their heterosexual counterparts, while lesbians earn wages that are not significantly different from heterosexual females. Finally, I examine the role of fluidity in sexual orientation over time and find that males who are longer-term gay identifiers earn wages that are 26.4 percent lower than their consistently heterosexual-identifying counterparts.