The role of apparent sexual orientation in explaining the heterogeneity of wage penalties among gay employees

Abstract

This chapter constitutes an attempt to revisit the method used to assess wage differences based on sexual orientation, by assessing the impact on wage of apparent sexual orientation—instead of using actual sexual orientation as has always been the case in prior studies. A two-step method has been used. The first step consists of an econometric estimation of sexual orientation as subjectively perceived—or assumed—by the employer; the second involves the use of so called “perceived sexual orientation” as an explanatory variable in a wage equation. The econometric results show that “perceived sexual orientation” plays a crucial role in the wage equation. This emphasizes that wage discrimination is not homogeneous among gay employees: the wage gap between an employee “perceived” as gay by his employer, and another “not perceived” as such, is highly significant and larger than –6 %. Moreover, the method used allows estimating the individual cost of coming out in the workplace.