♠ Posted by Emmanuel in Gender Equality at 9/25/2007 01:37:00 PMI was looking through recent research papers posted at the Institute for the Study of Labor (IZA) when "The Sexual Orientation Wage Gap:The Role of Occupational Sorting, Human Capital, and Discrimination" by Heather Antecol, Anneke Jong, and Michael Steinberger caught my attention. It provides some preliminary answers to the question of why income differences persist among gay and lesbian Americans relative to their heterosexual counterparts--both married and unmarried. The authors investigate three reasons for these differentials: occupational sorting (some may choose more lucrative jobs than others), differences in human capital accumulation, and labor market discrimination. Using sophisticated economeric models that I need to read up on, the results appear to differ for gay and lesbian Americans.
Lesbian women earn more than their gay and heterosexual counterparts regardless of marital status due to their higher levels of human capital accumulation (read: education). On the other hand, while gay men earn more than their cohabiting heterosexual male counterparts, they earn less than those who are married. Unlike for lesbian women, this result is attributable mainly to workplace discrimination. However, top-earning gay males earn nearly as much as their married counterparts, while the advantage of top-earning lesbian females narrows. For sure, these are interesting findings that are bound to generate spirited discussions about sexual orientation and wage differentials. In any event, there is no definitive answer to the question posed in the title. Here is the conclusion from the paper:
Recent public and legislative debate has focused on earnings differentials between gay and lesbian Americans relative to their heterosexual counterparts. Sound policy must be based on addressing the underlying causes of these wage differentials. Using the 2000 U.S. Census we show that gay men face a wage penalty relative to their married counterparts, but enjoy a wage advantage relative to their cohabitating counterparts.
Given these patterns, it is unlikely that there will be a simple explanation for the sexual orientation wage gap. In fact, the explanations likely differ depending on whether the sexual orientation group under consideration enjoys a wage advantage or suffers from a wage penalty relative to their heterosexual counterparts. Therefore, we explore three potential explanations—occupational sorting, differences in human capital accumulation, and labor market discrimination—using an analysis of the mean wage gap. Specifically, using the Oaxaca-Blinder (1973) decomposition, we find that differences in human capital accumulation, particularly education, are the main reason behind the observed wage advantage enjoyed by lesbian females relative to their heterosexual counterparts (irrespective of marital status) and gay males and their cohabitating counterparts, while occupational sorting and discrimination play only a modest role. However, we find that the entire wage penalty suffered by gay males relative to their married counterparts is driven by discrimination.
Unfortunately, analysis of the mean sexual orientation wage gap overlooks that the gap is not uniform along the entire distribution of wages, thus we expand our analysis by examining the determinants of the sexual orientation wage gap along the entire wage distribution using a DiNardo, Fortin, Lemieux (DFL) decomposition. We find that while gay males experience an average wage penalty relative to married males, top-earning gay males earn wages nearly identical to their married counterparts. In addition, the wage advantage of top-earning lesbian females relative to their married counterparts is smaller than the average advantage. While the non-uniformity in the sexual orientation wage gap along the distribution of wages does lead to some small differences in the relative roles of our three alternative explanations across various portions of the wage distribution, the main conclusions from the analysis of the mean wage gap persist.