The impact of party affiliation of governor and state political ideology on the labor market outcomes of transgender individuals

Purpose - The purpose of this paper is to investigate whether there is a causal impact of party affiliation of state governors operating within a liberal state legislature on labor market activity of transgender individuals. The common perception is that Republicans are more likely to believe a person’s gender is determined by their sex at birth than Democrats. Such beliefs can influence voting, policies and practices. Design/methodology/approach - Survey data on employment outcomes and other individual level characteristics are used from two surveys focusing on transgender individuals for the periods 2008 and 2015. These surveys represent the largest collection of data that examines the experiences of transgender people in the USA. To establish a casual effect, this analysis employs fixed effects Ordinary Least Squares methods and Propensity Score Matching algorithms. Findings - Exploiting variations in the party affiliation of governors and liberal state governments, the study finds mixed employment effects of living in a Democratic-governed liberal state. Specifically, this paper shows that transgender people living in such states have an 18 percentage point (or 26 percent) higher likelihood of being employed in the 2008 survey, but a 16.4 percentage point (or 25 percent) lower likelihood of being employed in the 2015 survey. Despite the lower propensity to be out of the labor market in the 2008 sample, results from both surveys indicate a higher likelihood of being unemployed. These findings are robust to the inclusion of additional covariates (including confounders), alternative specifications and different estimation techniques. Heterogeneous effects are also explored. Originality/value - To the authors’ current knowledge, this is the first study to systematically investigate the relationship between living in democratically governed liberal states and labor market circumstances of transgender people in the USA. This is the first paper to establish a causal relationship using matching techniques. The paper also provides suggestive evidence of the role of government ideology in influencing the working lives of transgender people.