Labor market outcomes and gender-affirming care: Evidence from Swedish administrative data

Abstract:

Using population-wide administrative data from Sweden, we examine how labor market outcomes evolve following entry into gender-affirming care. We estimate event-study models comparing transgender individuals with matched cisgender controls to trace changes in employment, earnings, education, and health before and after the first diagnosis of gender incongruence. We document three main findings. First, labor market trajectories diverge markedly by gender identity. Relative to their projected pre-treatment trajectories, transgender women experience persistent declines in employment and earnings, whereas transgender men experience little change in employment and sustained improvements in earnings. Second, transgender women exhibit increased participation in education following diagnosis, consistent with delayed labor market entry or human capital investment during transition. Third, changes in health evolve differently across groups. Among transgender men, improvements in mental health coincide with subsequent earnings gains, while among transgender women, continued deterioration in mental health does not fully account for persistent labor market losses. Taken together, the evidence suggests that the labor market consequences of gender-affirming care differ substantially between transgender men and transgender women and are likely to reflect multiple mechanisms rather than a single underlying process.

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