Gay Pay for Straight Work: Mechanisms Generating Earnings Disadvantage

Sean Waite, McGill University
Nicole Denier, McGill University

We explore four possible causes of sexual minority earnings gaps: 1) variation in human capital and labour force participation, 2) occupation and industrial sorting, 3) the discretionary nature of performance pay and weak institutionalization of anti-discrimination legislation, more common to the private sector, and 4) different returns to marriage and parenthood. Using the 2006 Census of Canada, we find heterosexual men earn more than gay men, followed by lesbians, and heterosexual women. Oaxaca-Blinder decompositions reveal industry, rather than occupation, disadvantages all three groups. Controlling for human capital, occupation, and industry reduces pay gaps, but much remains unexplained. Wage gaps are totally eliminated for gay men and lesbians in the public sector. Lastly, we find heterosexual women experience a motherhood penalty, heterosexual men experience a fatherhood premium and both receive a premium for marriage; however, neither children nor marriage have an effect on the earnings of gay men or lesbians.