Skip to main content

Sexual Orientation and Labor Market Discrimination

Abstract

We develop empirical estimates of the return to sexual orientation in the labor market and utilize the 2004 Current Population Survey to determine if lesbians and gay men are treated differently from their heterosexual counterparts. We find strong evidence consistent with the hypothesis of discriminatory treatment against gay men, and this evidence differs substantially by occupation. On the other hand, we find no evidence of discrimination against lesbians. These findings are consistent with priors based on economic theory of the standard taste for discrimination and statistical discrimination models. The results for both men and women are consistent across wage and total compensation regressions.

This is a preview of subscription content, access via your institution.

Notes

  1. 1.

    Tebaldi and Elmslie (2006) study the relationship between sexual orientation and labor supply. They find strong evidence that lesbians supply more labor and gay men supply less labor than similar heterosexual women and men.

  2. 2.

    Becker (1957) predicts that employer discrimination should diminish over time as the taste for discrimination cuts into competitive profits. However, Black (1995) shows that positive job search costs create monopsony power for the firm that could extend this form of discrimination into the long run.

  3. 3.

    Also see Klawitter and Flatt (1998) and Black et al. (2000).

  4. 4.

    This is true even for couples without children (Kurdek 1993).

  5. 5.

    Another CDC (2001) study finds that an average of 26% of gay men are HIV positive among patients at 23 STD clinics in 13 separate metropolitan areas in the U.S. This compares with 2.3% of all non-gay male patients at those clinics. These data ended in 1994.

  6. 6.

    The results of the econometric analysis, discussed in Section V, did not change when individuals younger than 30 years were excluded from the sample.

  7. 7.

    Full time is defined as working at least 35 h per week.

  8. 8.

    See Table 3 for details about this variable.

  9. 9.

    We also used the question “Why was...absent from work last week?” to create a proxy for health. However, the frequency of individuals who was absent from work due to illness, injury, or medical problems were too small, making its use into our model unreliable.

  10. 10.

    We estimated a probit model (not reported) in which the dependent variable assumes value 1 if a person is in the labor force and 0 otherwise. The set of explanatory variables includes education, a proxy for work experience (quadratic form), number of dependents, non-wage income, occupation dummies, and state dummies. The identifying variable is non-wage income.

  11. 11.

    According to Halvorsen and Palmquist (1980), the percentage impact on wages/earnings given the presence of the characteristic/factor represented by the dummy variables must be measured using the formula \( 100g = 100{\left\{ {\exp {\left( {\beta _{\operatorname{i} } } \right)} - 1} \right\}} \)where g is the relative effect on wages and i is the dummy variable's coefficient.

  12. 12.

    The marriage premium is very consistent across the regressions. In our regressions that control for hours worked (columns 1–3) the premium ranges between 15 and 16%. This result runs counter to Blandford (2003) who finds that controlling for sexual orientation reduces the annual earnings marriage premium for men. The premium actually increases to 19% in the earnings regressions that do not control for hours worked.

  13. 13.

    We also run an identical regression using hourly compensation on the left-hand side. To save space, these results are not reported. The results are very close to those of the wage regression. The point estimates on the gay and heterosexual unmarried coefficients are −0.275 and −0.167, respectively. These coefficients imply a 9% compensation differential.

  14. 14.

    For completeness, we also run interactions between occupation and heterosexual cohabitating men. We do not report these results because we do not have a theoretical reason to suspect that the marriage premium should differ by occupation. The results do not change our basic conclusion. The pattern of differential treatment found for gays is not found for heterosexual unmarried men. Except for the health care occupations, the interaction terms are all insignificantly different from zero.

  15. 15.

    Although the literature on the marriage premium for women is much smaller and less clear than it is for men, Neumark and Sanders (1994) find evidence for a positive marriage premium and argue that the failure to find a such a premium in other studies is due to a bias inherent in OLS regressions.

References

  1. Allegretto S, Arthur MM (2001) An empirical analysis of homosexual/heterosexual male earnings differentials: unmarried and unequal? Ind Labor Relat Rev 54:631–646 (April)

    Article  Google Scholar 

  2. Arrow K (1973) The theory of discrimination. In: Rees A, Ashenfelter O (eds) Discrimination in labor markets. Princeton University Press, Princeton

    Google Scholar 

  3. Badgett MVL (1995) The wage effects of sexual orientation discrimination. Ind Labor Relat Rev 48:726–739 (July)

    Article  Google Scholar 

  4. Badgett MVL (2001) Money, myths, and change: the economic lives of lesbians and gay men. University of Chicago Press, Chicago

    Google Scholar 

  5. Becker GS (1957) The economics of discrimination, 2nd edn. University of Chicago Press, Chicago

    Google Scholar 

  6. Berg N, Lien D (2002) Measuring the effect of sexual orientation on income: evidence of discrimination? Contemp Econ Policy 20:394–414 (October)

    Article  Google Scholar 

  7. Berrill KT (1992) Anti-gay violence and victimization in the United States: an overview. In: Herek GM, Berrill KT (eds) Hate crimes: confronting violence against lesbians and gay men. Sage, Newbury Park, CA

    Google Scholar 

  8. Black D (1995) Discrimination in an equilibrium search model. J Labor Econ 13:309–334 (April)

    Article  Google Scholar 

  9. Black D, Gates G, Sanders S, Taylor L (2000) Demographics of gay and lesbian populations in the United States: evidence from available systematic data sources. Demography 37:139–154 (May)

    Article  Google Scholar 

  10. Blandford JM (2003) The Nexus of sexual orientation and gender in the determination of earnings. Ind Labor Relat Rev 20:622–642 (July)

    Article  Google Scholar 

  11. Blause J (1989) Closed doors: sexual orientation bias in the Anchorage housing and employment markets. Identity reports: sexual orientation bias in Alaska. Identity Inc., Anchorage

    Google Scholar 

  12. Bloom DE, Glied S (1989) The evolution of AIDS economic research. Health Policy 11:187–196 (April)

    Article  Google Scholar 

  13. Carpenter C (2003) Self-reported sexual orientation and earnings. Mimeo

  14. Carpenter C (2004) New evidence on gay and lesbian household incomes. Contemp Econ Policy 22:78–94 (January)

    Article  Google Scholar 

  15. Center for Disease Control (2000) HIV/AIDS Surveillance Report. http://www.cdc.gov/hiv/stats/hasr1201/tables5.htm12

  16. Center for Disease Control (2001) HIV prevalence trends in selected populations in the United States: results from National Serosurveillance, 1993–1997. CDC, Atlanta (August)

    Google Scholar 

  17. Clain SH, Leppel K (2001) An investigation into sexual orientation discrimination as an explanation for wage differences. Appl Econ 33:37–47 (January)

    Article  Google Scholar 

  18. Halvorsen R, Palmquist R (1980) The interpretation of dummy variables in semilogarithmic equations. Am Econ Rev 70:474–475 (June)

    Google Scholar 

  19. Herek GM (1988) Heterosexuals’ attitudes toward lesbians and gay men: correlates and gender differences. J Sex Res 25:451–477 (November)

    Google Scholar 

  20. Herek GM (1991) Stigma, prejudice, and violence against Lesbians and Gay men. In: Gonsiorek JC, Weinrich JD (eds) Homosexuality: research implications for public policy. Sage, London, UK, pp 60–79

    Google Scholar 

  21. Human Rights Campaign (2001) The state of the workplace for lesbian, gay, bisexual, and transgender Americans 2001. http://www.hrc.org

  22. Human Rights Campaign (2002) The state of the workplace for lesbian, gay, bisexual, and transgender Americans 2002. http://www.hrc.org

  23. Kite ME, Whitley BE Jr (1996) Sex differences in attitudes toward homosexual persons, behaviors, and civil rights: a meta-analysis. Pers Soc Psychol Bull 22:336–353 (April)

    Article  Google Scholar 

  24. Klawitter MM, Flatt V (1998) The effect of State and local antidiscrimination policies on earnings for gays and lesbians. J Policy Anal Manage 17:658–686 (Fall)

    Article  Google Scholar 

  25. Kurdek LA (1993) The allocation of household labor in gay, lesbian, and heterosexual married couples. J Soc Issues 49:127–139 (Fall)

    Article  Google Scholar 

  26. Leigh JP, Lubeck DP, Farnham P, Fries JF (1997) Absenteeism and HIV infection. Appl Econ Lett 4:275–280 (May)

    Article  Google Scholar 

  27. Mincer J, Polachek S (1974) Family investments in human capital: earnings of women. J Polit Econ 82:S76–S108 (March/April)

    Article  Google Scholar 

  28. Neumark D, Sanders K (1994) Sources of bias in women’s wage equations: results using sibling data. J Hum Resour 29:379–405 (Spring)

    Article  Google Scholar 

  29. Patterson CJ (1998) The family lives of children born to lesbian mothers. In: Patterson C, D’Augelli AR (eds) Lesbian, gay, and bisexual identities in families: psychological perspectives. Oxford University Press, Oxford, UK, pp 154–176

    Google Scholar 

  30. Phelps ES (1972) The statistical theory of racism and sexism. Am Econ Rev 62:659–661 (September)

    Google Scholar 

  31. Rand Health (2003) Caring for HIV patients http://www.rand.org/publications/RB/RB4525/

  32. Tebaldi E, Elmslie B (2006) Sexual orientation and labor supply. Appl Econ 38:549–562

    Google Scholar 

  33. White H (1980) A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48:817–838 (May)

    Google Scholar 

  34. Winfeld L, Spielman S (2001) Straight talk about gays in the workplace, 2nd edn. Harrington Park Press, New York

    Google Scholar 

  35. Yang A (1997) From rights to wrongs: public opinion on gay and lesbian American moves toward equality. NGLTF Policy Institute, Washington, DC

    Google Scholar 

Download references

Acknowledgement

The authors thank Karen Conway, William Greene, Ju-Chin Huang, Sinthy Kounlasa, Robert Mohr, Cari Moorhead, Ellen Mutari, and Christine Shea for helpful comments and discussion.

Author information

Affiliations

Authors

Corresponding author

Correspondence to Bruce Elmslie.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Elmslie, B., Tebaldi, E. Sexual Orientation and Labor Market Discrimination. J Labor Res 28, 436–453 (2007). https://doi.org/10.1007/s12122-007-9006-1

Download citation

Keywords

  • Wage discrimination
  • Sex orientation
  • Gay