Monday, January 10, 2011

Lesbians Make More Money Than Straight Women

It would seem to me to make for a more catchy button slogan, though less politically correct, than the gender divide. As with that, my feeling is it has less to do with any sort of discrimination than it does with cumulative personal choices. (via)

"The wage premium paid to lesbian workers is a bit of a mystery. Sure, lesbian women are better-educated on average, are more likely to be white, live predominantly in cities, have fewer children, and are significantly more likely to be a professional. But even when you control for these differences, the wage premium is still on the order of 6%.

It is fascinating when the data starts looking like the majority is being discriminated against. Is it wage discrimination, though, or is there an economic argument for why lesbians are getting paid more?

Well, a possible explanation has to do with the division of labor in a heterosexual union.
This theory is cleverly tested in a paper which calculates the wage premium paid to lesbians in two distinct groups—those who were once in a heterosexual marriage and those have never been married.* The assumption made is reasonable; lesbian women who were once married to men (about 44% of the lesbians in the sample) presumably have in the past had the expectation that they would have a marriage partner with a higher income. The never-married women might also have had this expectation, but it is much more likely that, on average, women in that group expected to be in a relationship with another woman with a comparable income.

Does the evidence support the theory that the wage premium can be explained by greater investment in more market-oriented skills by lesbian women? Well the premium does not disappear completely for the subset of previously married women but is reduced by about 17%, providing some support for the idea. At 5.2% though, the once-married lesbian premium is still high enough that I don’t think we can consider the case closed.

Side note; you may want to think about wearing glasses.

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