Eastern Economic Journal

, Volume 39, Issue 1, pp 45–71 | Cite as

Differences Do Not Matter: Exploring the Wage Gap for Same-Sex Behaving Men

  • Michael E Martell


An emerging literature provides evidence that same-sex behaving men earn significantly less than different-sex behaving men. I corroborate these existing findings and explore the source of these earnings differentials. I show that differences in worker characteristics between same-sex behaving men and different-sex behaving workers cannot explain the significant wage differential that same-sex behaving men experience. Wage differentials for same-sex behaving men are surprising because sexual orientation is not a visible trait. It seems as though same-sex behaving men might use a strategy of “passing” to avoid discrimination. I develop a model of worker-firm interaction that incorporates passing. I show the existence of an equilibrium in which wage differentials reflect a compensating differential, where same-sex behaving workers accept lower wages in exchange for being able to reveal their sexual orientation within a tolerant firm. In this equilibrium, competition will not erode earnings differentials as traditional models of discrimination suggest.


labor discrimination gay and lesbian wage differentials compensating differentials 

JEL Classifications

J01 J31 J7 



I would like to thank Mary Hansen, James Bono, John Willoughby, and Kara Reynolds (in addition to three anonymous reviewers) for their thoughtful comments that improved earlier drafts of this manuscript.


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Copyright information

© Eastern Economic Association 2012

Authors and Affiliations

  • Michael E Martell
    • 1
  1. 1.Department of EconomicsAmerican UniversityWashingtonUSA

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