The Sexual Orientation Wage Gap: The Role of Occupational Sorting and Human Capital

Using data from the 2000 U.S. Census, the authors explore two alternative explanations for the sexual orientation wage gap: occupational sorting, and human capital differences. They find that lesbian women earned more than heterosexual women irrespective of marital status, while gay men earned less than their married heterosexual counterparts but more than their cohabitating heterosexual counterparts. Results of a Oaxaca-Blinder decomposition indicate that the relative wage advantages observed for some groups of lesbians and gay men were mainly owing to greater levels of human capital accumulation (particularly education), while occupational sorting had little or no influence. The relative wage penalties that were observed in other cases, however, cannot be attributed either to differences in occupational sorting or to human capital. An analysis employing a DiNardo, Fortin, and Lemieux decomposition, which allows for variation in the wage gap at different points along the wage distribution, broadly confirms these results.