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Sexual Orientation, Labour Earnings, and Household Income in Canada

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Abstract

Using five cycles of a large nationally representative Canadian health survey, covering 2008 to 2012, the present paper examines the extent of labour earnings and household income gaps among gays, lesbians, and heterosexuals. The data used in this paper has the advantage of allowing for a direct classification of sexual orientation, through respondent self-identification. In accord with previous reports, this paper finds that homosexual females holding fulltime employment earn statistically significantly above comparable heterosexual females. Homosexual males with fulltime employment, on the other hand, are found no different in their earnings, from otherwise identical heterosexual males. When household income is considered, data reveal that lesbian households have statistically significantly lower incomes compared with otherwise identical gay households, who outearn heterosexuals as well. This pattern, not previously reported for Canada but observed in some other countries, is likely due to the combined effects of the general gender wage gap, the fading of homosexual males’ wage penalty, and the existence of two male income earners in a gay male household.

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Notes

  1. The methodology of “interval regression,” now implemented in the standard statistical packages such as STATA (StataCorp 2009), was first developed by Nelson (1976), to appropriately deal with the data recorded in intervals. It has been employed in studies such as Long and Caudill (1991), Long and Freese (2006), and Clarke and Sevak (2013) which estimated the gay males’ earnings penalty in the United States. Assume that the actual income of individual i is \( {y}_i^{\ast } \), and is normally distributed:

    $$ {y}_i^{\ast }={X}_i\beta +{\varepsilon}_i $$

    But, the data record the intervals I i , in which the \( {y}_i^{\ast } \) is placed:

    $$ {\dots < I}_L<\dots <{I}_{i-1}<{I}_i<{I}_{i+1}<\dots {I}_R<\dots $$

    Given the normal distribution, we have:

    $$ \frac{\left({I}_{i-1}-{X}_i\beta \right)}{\sigma}\le \frac{\left({y}_i^{\ast }-{X}_i\beta \right)}{\sigma}\le \frac{\left({I}_i-{X}_i\beta \right)}{\sigma} $$

    Accordingly, if \( F(.) \)stands for the cumulative distribution function of the standard normal, the probability of the income being in each of the intervals is as follows:

    $$ {P}_i\left({I}_{i-1}<{y}_i^{\ast }<{I}_i\right)= F\left(\frac{\left({I}_i-{X}_i\beta \right)}{\sigma}\right)- F\left(\frac{\left({I}_{i-1}-{X}_i\beta \right)}{\sigma}\right) $$

    The corresponding likelihood function is the product of the probabilities, P i , as follows:

    $$ L=\prod_{i=1}^n{P}_i $$

    Maximizing the logarithm of this likelihood function allows for the estimation of β and σ.

  2. To investigate whether the determinants of earnings vary across sexual orientation and gender groups, separate regressions have been run, limiting the samples to lesbians, gay males, heterosexual females, heterosexual males, and heterosexuals of both genders. The notable results from this investigation are as follows. There is no marriage premium for either gay males or lesbians. The return to schooling is the largest for lesbians; but, they do not receive a credential effect. The three other groups are comparable in this regard. Finally, physical health status is only statistically significant for heterosexual females. These regressions are available upon request.

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  1. Department of Economics, Saint Mary’s University, Halifax, NS, Canada

    Maryam Dilmaghani

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Correspondence to Maryam Dilmaghani.

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Dilmaghani, M. Sexual Orientation, Labour Earnings, and Household Income in Canada. J Labor Res 39, 41–55 (2018). https://doi.org/10.1007/s12122-017-9249-4

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