ABSTRACT

The small, but growing, literature on the economics of discrimination according to sexual orientation has tended to fi nd that, in general, while gay men earn less than heterosexual men, lesbian women earn more than heterosexual women. This pattern appears to hold, broadly, in the United States (Clain and Leppel 2001; Black et al. 2003)1, the Netherlands (Plug and Berkhout 2004) and in the United Kingdom (Arabsheibani et al. 2005). These aggregate fi ndings suggest that gay men may suffer from labor market discrimination more than lesbian women. However we do not know how readily these fi ndings apply to all members of the gay and lesbian population and, as such, how well any explanatory framework applies to all members of the minority population. One way to begin to address these issues is to examine how any pay differences between heterosexuals and lesbians and gay men (hereafter LG), vary across different sectors of the economy, an issue of which we currently know little. It is common, for example, to examine the size of the gender or ethnic minority pay gaps across age groups, in different regions or in different jobs2 with a view to help target any remedial policy more effectively. In what follows we apply a similar strategy to the analysis of LG pay gaps in both Britain and the United States, decomposing the population by factors known to be associated with different wages or working conditions, such as age, education or region, in an attempt to discover to what extent the aggregate fi ndings outlined above apply across the population.