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Sexual Orientation and Labor Market Discrimination


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.

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  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.


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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.

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Correspondence to Bruce Elmslie.

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Elmslie, B., Tebaldi, E. Sexual Orientation and Labor Market Discrimination. J Labor Res 28, 436–453 (2007).

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  • Wage discrimination
  • Sex orientation
  • Gay