Self-Identified Sexual Orientation and the Lesbian Earnings Differential Michael E. Martell Franklin and Marshall College mmartell@fandm.edu Mary Eschelbach Hansen American University mhansen@american.edu December 15, 2014 Abstract Two decades of research on differences in labor market outcomes by sexual orientation has concluded that lesbian workers earn more than heterosexual women. This research, however, is largely based upon data that do not ask respondents about their own sexual orientation. We are the first to use nationally representative data that includes selfidentified sexual orientation. We find evidence of a sizable wage penalty for self-identified lesbians in 2008 and 2010. We show that using common behavioral proxies for sexual orientation overstates of the earnings of lesbians in some years, but understates it in other years. Using the different methods of identification leads to different conclusions about the way the recession affected lesbians: It took much longer for the wages of self-identified lesbians to recover. Virtually all existing estimates of wage differentials by sexual orientation in the U.S. depend on surveys that do not ask respondents about their own sexual orientation. Researchers must classify respondents as gay, lesbian, or bisexual using gender information together with reports of cohabitation status or sexual behavior. That is, same-sex sexual orientation is implied if both members of a co-habiting couple are of the same gender or if a respondent reports having sexual relations with a partner of the same sex. Neither method is ideal. Using the cohabitation status method fails to identify homosexual respondents who are not currently living with a partner, while using the sexual behavior method 1 omits some sexually inactive homosexuals and includes respondents who would not self-identify as heterosexual. Nearly two dozen studies have used these methods of researcher identification to document an earnings penalty for gay men in the United States. About half of these studies also document an earnings premium for lesbian women, but half find no significant difference among women by sexual orientation. There is some recent evidence of a declining lesbian premium (Cushing-Daniels and Yeung 2009). To our knowledge, the only study that finds a statistically significant earnings penalty for lesbian women in the U.S. is Carpenter (2005), which is also the only study to date that uses self-reported sexual orientation. Carpenter’s data are limited to California. In this paper, we use self-reported sexual orientation and earnings data from the three most recent General Social Surveys. We find that the method of classification matters for understanding the evolution of wage differentials for lesbian, gay, and bisexual workers. We observe a penalty for both self-identified and researcher-identified lesbians in 2008, confirming Carpenter’s findings. Further, we find that trends in wage differentials between the self-identified and researcher-identified groups vary in a meaningful way: Self-identified lesbians still had a substantial earnings penalty in 2010, but researcher-identified lesbians did not. We consider two reasons why the measured earnings penalty might differ by method of identification. First, we consider differences in the composition of the self-identified and researcher-identified groups. Second, we consider differences in returns to human capital and family characteristics, as well as differences by region and occupation. The data show that the recent economic downturn affected both researcher-identified and self-identified lesbians negatively but it took longer for self-identified lesbians to recover. The observed wage differentials in the 2008 correspond to the time leading up to the offi- 2 cial begining of the recession. While the lead up to the recession negatively affected both self-identified and researcher-identified lesbians, the labor market outcomes for self-identified lesbians remained poor for a longer time than outcomes for the group that includes women who have homosexual behaviors but self-identify as heterosexual. The Lesbian Wage Puzzle Badgett (1995) was the first to note the asymmetry in wage differentials for male and female homosexuals. She documented a wage penalty for behaviorally gay men, and found a positive but statistically insignificant wage premium for lesbians. The asymmetry in the results for gay men and lesbians is difficult to reconcile with standard economic theory (for example, Becker 1957), so Badgett’s findings prompted a number of follow-up studies. In table 1 we summarize the results for lesbians in studies of the U.S.1 – Table 1 about here – The follow up studies confirmed the asymmetry in wage differentials for gay men and lesbians and documented large and significant earnings premia for lesbians. Klawitter and Flatt (1998) were the first to find a significant earnings premium for lesbians in their study of the impact of Employment Nondiscrimination Acts (ENDAs) on the wages of gay men and lesbians. Many studies subsequently documented a lesbian premium (Clain and Leppel 2001; Berg and Lien 2002; Black, Markar, Sanders, and Taylor 2003; Blandford 2003; Comolli 2005), leading to a general consensus that lesbians appear to be at an economic advantage relative to heterosexual women.2 This work 1 Most studies have been of the U.S, but studies have also found a lesbian premium in Sweden and the U.K. (Ahmed and Hammarstedt 2010; Ahmed, Andersson, and Hammarstedt 2011; Ahmed, Andersson, and Hammarstedt 2013; Arabsheibani, Marin, and Wadsworth 2004). In Greece however, there is evidence of a lesbian penalty (Drydakis 2014). 2 More recent research has begun to investigate the source of the lesbian earnings pre- 3 also consistently documented the significant earnings penalty for gay men,3 even though the authors used different data sources and different definitions to identify homosexuals. The two main data sources in the literature are the General Social Surveys (GSS) and the U.S. Census. The Census does not ask questions about sexual behavior, but, as noted above, researchers identify same-sex cohabitants as homosexual. Omitting single homosexuals may introduce bias if single respondents are systematically different from cohabiting respondents. Further, the selection process into partnership varies between homosexual and heterosexuals (Carpenter and Gates 2008). All of the studies using the Census find a statistically significant annual earnings premium for lesbians relative to heterosexual women, but the range of estimates of the premium is quite wide. To illustrate: Baumle and Poston (2011) find a premium of four to nine percent, while Antecol, Jong and Steinberger (2008) find a premium of about 30 percent. Since 1988, the GSS has asked respondents about their sexual behaviors and sexual histories. Researchers using the GSS have available several measures of sexual behavior with which to identify homosexuals, which we discuss in more detail below. None of these measures is a perfect proxy for sexual orientation. Using sexual behavior to identify homosexual respondents omits sexually abstinent respondents. More importantly, it wrongly classifies some heterosexual respondents as homosexual and some homosexual respondents as mium. A portion of the measured premium is attributable to the higher levels of human capital that lesbians have relative to heterosexual women (Antecol, Jong, and Steinberger 2008). Further, the lesbian premium is larger among lesbians who have never been married (to a man), which suggests that the lesbian premium may be related to decreased household specialization for lesbians (Daneshvary, Waddoups, and Wimmer 2009). However, the lesbian premium remains intact after accounting for differentials in the presence of and return to children in lesbian households (Jepsen 2007). We discuss this literature in greater detail below. 3 An exception is Clarke and Sevak (2013), who find evidence of a premium for gay men in recent years. 4 heterosexual. Misclassification is more likely among women than men because heterosexual women are more likely than heterosexual men to have sex with a member of the same sex (Laumann et al., 1994, Peplau, 2003). In 2008, the GSS began asking respondents to identify their own sexual orientation. The addition of information on self-identified sexual orientation represents a substantial improvement in our ability to study lesbians in the GSS. The GSS, unfortunately, has other weaknesses. It reports individual income only within ranges. Most studies that use the GSS transform income ranges into other measures or supplement income ranges with additional data from other sources, as described below. Researchers using the GSS from the 1990s have generally found a statistically significant lesbian income premium, with estimates of the premium in the comparatively narrow range of 30 to 38 percent (Berg and Lien 2002; Black, Markar, Sanders, and Taylor 2003; Blandford 2003). Perhaps the greatest weakness of the GSS is that each year’s sample is small. For this reason, researchers who use the surveys across a long span of time have been more likely to obtain statistically significant results than those who use only one or two years of the data. An exception is CushingDaniels and Yeung (2009), who use the longest run of GSS: 1988 through 2006. After correcting for selection into full-time work, they find no statistically significant differences in earnings by sexual orientation for either men or women. Moreover, they find the familiar lesbian premium for married lesbians only, and they find a (statistically insignificant) penalty for unmarried lesbians. Cushing-Daniels and Yeung interpret this as evidence of a diminishing of the premium over time, though Carpenter (2005) suggests that similar evidence from the 1998-2000 GSS might be associated with changes in the propensity of lesbians to work full time. 5 Carpenter (2005) is, to our knowledge, the only paper to date that utilizes a survey conducted in the U.S. in which respondents are asked to identify their own sexual orientation.4 The data are from the California Health Interview Survey of 2001 and reveal no statistical difference in hourly wages for gay men or lesbian women. However, in nearly all the specifications the coefficient on sexual orientation is negative and in some specifications there is a statistically significant wage penalty for bisexual women. While data for California are unlikely to be representative of the entire U.S., it is possible that the difference between Carpenter (2005) and the typical study is explained by differences between self-identified and researcher-identified lesbians. The Importance of Classification The classification of workers as heterosexual or homosexual is important to the estimation of wage differentials for two reasons. First, economic theories that aim to explain the differences in the labor market experiences of lesbian, gay, and bisexual (LGB) workers highlight the role of identity and disclosure of an LGB orientation on individual economic outcomes. Second, errors in classification may represent important omitted variable bias. Consider the argument that a wage differential for homosexuals may be the result of differences in patterns of household specialization (Black, Sanders, and Taylor 2007). The logic is that a lesbian might invest in more human capital than her heterosexual counterpart because she does not expect to have a male partner who will specialize in market work. Conversely, a gay man might invest less in his human capital than his heterosexual counterpart.5 4 Plug and Berkhout (2008) have self-identified sexual orientation of young men the Netherlands. They find a penalty that they attribute to occupational selection. Carpenter (2008) has self-identified data for Canada and find a lesbian premium. 5 Of course, this has not been observed empirically as nearly every study documents that 6 This theory of specialization is motivated by identity: We would not expect women who sleep with women but identify as heterosexual to have different human capital investments than the representative heterosexual woman. The disclosure of sexual orientation is also key in theories of discrimination against LGB workers. The application of standard theories of discrimination to the LGB case requires employers, co-workers, or customers to observe the sexual orientation of an LGB worker in order to discriminate against him or her. Of course, LGB workers are able to conceal their sexual orientation, although the desire to disclose sexual orientation and live openly may motivate LGB workers to choose tolerant workplaces and accept compensating differentials (Martell 2013a). Finally, classification might matter if heterosexual women who sleep with women are systematically different from other women in unobservable characteristics. For example, suppose women who identify as heterosexual and sleep with women – an unconventional if not uncommon sexual practice – are unconventional in other ways. If these women exhibit unconventional personal behaviors in the workplace, their being identified as lesbian by researchers will bias wage estimates of lesbians. Alternatively, some lesbians who self-identify may exhibit traditionally masculine traits, such as assertive or risk-taking behaviors, while other lesbians may have workplace behaviors that conform more to gender norms. In all of these examples, it is possible that an unobserved personality characteristic – not sexual orientation – is the true cause of any observed wage differential. Classifying workers as heterosexual or homosexual based on their selfidentification is also important for analyzing the impact of public policies such as ENDAs on LGB workers. Important differences between researchergay men and lesbians both have more education than their heterosexual counterparts. 7 identified and self-identified lesbians limit the ability of researchers to accurately measure the effectiveness of public policy directed towards self-identified LGB workers. Self-identification is also important to measuring changes over time in the labor market outcomes of LGB workers. If increased tolerance of homosexuality is accompanied by increases in the likelihood that those engaging in same-sex sexual relations will self-identify, observed changes in wages or employment outcomes for researcher-identified LGB workers may represent changes in the composition of that group rather than changes in the actual experiences of self-identified LGB workers. This paper is the first to explore the extent to which estimated wage differentials vary across methods for measuring sexual orientation. We show that using different methods leads to meaningfully different estimates of wage differentials for lesbians. Empirical Approach We follow the existing literature on estimating wage differentials for lesbians, but we also allow the wage differential to vary over time. We predict log hourly wages, ŵi = α + β1 Li + β2 Yit + β3 (Li ∗ Yit ) + βXi + i (1) where Li is a dummy variable taking a value of one if a female respondent self-identifies as a lesbian or bisexual. Yit is a year fixed effect, and Li ∗ Yit is an interaction term between “lesbian” and “year” that allows us to capture differences in the wage differential over time. Xj is a vector of control variables that includes measures of human capital (years of education and potential experience, its square, and interaction between lesbian and potential experience) and demographics and family characteristics (race, marital status, number of 8 children, region of residence and residence in a metro area). Some specifications below also include interaction terms between lesbian sexual orientation and characteristics such as potential experience and number of children. Note that our dependent variable is the hourly wage. Hourly wage is not recorded in the GSS, but we use the two-step procedure outlined elsewhere to estimate it (Martell 2013a; Martell 2013b). We first estimate dollar amounts for annual earnings within the categories reported in the GSS following Badgett’s (1995) approach, which is also the most common approach.6 For each year of the GSS, we use that year’s Current Population Survey to compute the median annual earnings within each earnings range for all women who work. Medians are reported in 2010 dollars. This procedure allows the estimate of earnings to vary across time within the fixed ranges used by the GSS. However, for each point in time, variation is still limited, which increases the probability of type two error (failing to detect wage differentials when they exist). To compute hourly wage, we divide annual earnings by annual hours of work. Annual hours is the number of hours the respondent worked last week, as reported in the GSS, times 50 work-weeks. This hours information was not available in many of the earlier versions of the GSS that also had sexual behavior information. In our main specifications we restrict the estimation sample to those reporting in the GSS that they work full-time. Full-time workers reported a mean of 43 hours per week with a standard deviation of 10 hours. We also provide specifications with log(annual earnings) as the dependent variable for comparability with earlier studies. – Table 2 about here – 6 There have been several approaches to estimating earnings with the GSS. A straightforward approach is to use the midpoint of the income categories reported in the GSS. A second approach that utilizes the categorical income information is to estimate the probability of being in one category relative to the others using maximum likelihood (Berg and Lien 2002). Findings using the GSS data from the 1990s were consistent regardless of measure of income. 9 As noted above, because homosexual and bisexual orientation are relatively rare, the number of lesbians in the GSS is small. Table 2 shows the number of self-identified lesbians and bisexual women in the sample, along with descriptive statistics of the independent variables. The data include 38 self-identified lesbian or bisexual women who work full-time, which is just over three percent of the population. This estimate is consistent with existing counts in the demographic literature (Berg and Lien 2006). Combining lesbians and bisexuals in the data aligns our specifications with those in the existing literature and creates a larger sample size for estimation. Self-identified lesbians are less likely to be married, have fewer children, and are more likely to be white than heterosexual women. We would normally expect these characteristics to be associated with higher earnings for women. However, self-identified lesbians have lower average hourly wages than heterosexual women. Annual earnings of the two groups are not different. Table 3 shows the estimated wage differentials for self-identified lesbians. Specifications (1)-(3) show differentials in the hourly wage; specifications (4)(6) show differentials in annual earnings. The first two specifications in each group of three include full-time workers only; specifications (3) and (6) include both full-time and part-time workers. All specifications include controls for census region, and specifications (2)-(3) and (5)-(6) add controls for occupation. All specifications also include an interaction between sexual orientation and experience, which was suggested by Badgett (1995) and included in nearly all studies. The interpretation of this coefficient is discussed at length below. – Table 3 about here – We find a large but statistically insignificant wage penalty for self-identified lesbians who worked full-time in 2008. The wage penalty in 2008 is statisti- 10 cally significant when part-time workers are included.7 We find a larger and statistically significant wage penalty in 2010 that is robust to the inclusion of occupational controls. The wage penalty in 2010 is approximately 50 percent of the mean wage, or $6.50 an hour.8 We estimate a wage penalty of just six percent in 2012, but it is not statistically significant. We find a significant difference in annual earnings only in 2008 and only when part-time workers are included.9 Finding a lesbian wage penalty during a period when non-discrimination laws have come to protect many lesbians and gay men, and when public opinion polls suggest that acceptance of same-sex marriage and child-rearing are rising, presents a new puzzle for researchers. By 2008, the beginning of the period that our data span, nearly half of all states had implemented laws making employment discrimination based on sexual orientation illegal (Martell 2013b). While the passage of these laws had many causes, public support of protection from discrimination for gay and lesbian workers was an important factor (Haider-Markel and Meier 1996; Klawitter 2011). Indeed, an increase in tolerance in states with non-discrimination laws (Martell 2013b) has been accompanied by increasing levels of tolerance of homosexuality across the country (Smith 2011). To investigate this puzzle, we consider whether: 1. The penalty is the result of the use of self-identified sexual orientation rather than researcher assignment to the lesbian group. Is there a measurable penalty for researcher-identified lesbians? Are the lesbians who self-identify different in important ways from the people to whom re7 We also note that self-identified lesbians are more likely to be unemployed each survey year. The largest difference was in 2008 when 11 percent of self-identified lesbian respondents were unemployed in 2008 while only three percent of heterosexual women surveyed were unemployed. 8 Marginal effects are calculated as eβ1 − 1. 9 Lesbians may be compensating for a lower hourly wage by working more (Klawitter 2011). 11 searchers assign homosexual orientation? 2. The penalty is a result of mis-specification of the model. Are there important differences in returns to characteristics between lesbians and heterosexuals, or changes in those returns over time, that eliminates the penalty? The Role of Researcher Assignment We begin our investigation of the role of researcher assignment of sexual orientation by estimating wage differentials for researcher-identified lesbians for comparison with the results in table 3. We consider two ways to identify respondents as lesbian. We use the most common definition from the literature, which is to identify a respondent as lesbian if she had any same-sex sex partners in the last five years. We also include a less-common definition: a respondent is identified as lesbian if half of her sex partners since the age of eighteen have been female. Previous research has also identified respondents as lesbian if they have had at least one same-sex sex partner in the previous year or at least once since the age of eighteen. We focus on the “last five years” and “half of sex partners” definitions because they are most closely correlated with self-identified sexual orientation in our data. Table 4 shows that there were statistically significant and large wage and earnings penalties for researcher-identified lesbians in 2008, regardless of definition or specification. On average, the penalty for researcher-identified lesbians in 2008 is one-third larger than the largest statistically significant penalty measured for self-identified lesbians. In 2010, however, researcher-identified lesbians experienced a significant wage premium after controlling for occupation in specification (3). In 2012 we observe wage and earnings premia in five of the six specifications. These results do not mirror the results for self-identified 12 lesbians in table 3, for whom there was a wage penalty for full-time workers in all years, with the largest, statistically significant, and robust penalty found in 2010. Identity and disclosure matter. –Table 4 about here – To investigate further the role of identity and disclosure, we consider women who both self-identify as lesbians and are identified by researchers using the “past five years” definition of sexual behavior. These results are shown in the first and second columns of table 5. For the intersection of the sets of self-identified and researcher-identified lesbians, we find a wage penalty for lesbians in 2008, but it is statistically significant only when we include parttime workers in specification (2). We document a larger penalty for the union of the sets, as shown in the third and fourth columns of table 5. We also find a wage premium in 2012 for the union of researcher-identified and self-identified lesbians. The results for the union of the sets appear to be dominated by outcomes for researcher-identified lesbians, while the results for the intersection of the sets (2) are similar, but not identical, to the results for self-identified lesbians. Again we see that identity and disclosure matter in the estimation of the wage differential. –Table 5 about here – A comparison of the descriptive statistics in tables 2 and 6 reveals that, on average, self-identified lesbians are similar to women who are classified as lesbian based upon their sexual behaviors. Self-identified lesbians are (unsurprisingly) less likely to be married. They have fewer children and have more education. None of these differences is statistically significant. – Table 6 about here – However, a large proportion of respondents are misclassified: 20 percent of self-identified lesbians would not be classified as lesbians on the basis of their 13 reported sexual behavior, and more than 30 percent of researcher-identified lesbians do not self-identify. This misclassification is not surprising. Selfidentified sexual orientation, sexual desire and sexual behavior are distinct, and each is the product of a complex social process (Laumann, Gagnon, Michael, and Michaels 1994; Carpenter 2008). Consider first the women who engage in same-sex sexual behavior but who not self-identify as lesbian or bisexual. Figure 1 compares the number and characteristics of these women. Researcher-identified lesbians who do not also self-identify have less education, less potential experience (are younger) and have more children than respondents who self-identify but are not researcheridentified. Despite the small numbers, these differences are large enough to be statistically significant at the 10 percent level. These differing characteristics may play a role in explaining why we document different wage penalties for self-identified and researcher-identified lesbians. Note also that this type of misclassification is much less prominent for men in the GSS (Martell 2013a). Now consider differences between the women who self-identify as lesbian but who are not identified by researchers as lesbian. The age, education, and child-bearing patterns for this group are not different from the intersection of the sets when the “last five years” definition is used, but when the “half of partners” definition is used, these women are older, more education and have fewer children than the group that both self-identifies and is researcher-identified. There is an additional – and important – difference between women who selfidentify but are not researcher-identified. All researcher-identified lesbians are sexually active, and sexually active women have higher earnings than sexually abstinent women (Black, Markar, Sanders, and Taylor 2003). Not all selfidentified lesbians are sexually active. If respondents abstain from sex, they do not receive this premium. Misclassification therefore introduces an impor- 14 tant bias, and we cannot rule out the possibility that mis-classification plays a role in explaining the differences between our findings and earlier findings using the GSS. The Role of Returns to Characteristics Though it would be desirable to use a full decomposition to investigate the role of returns to characteristics, there are too few observations of lesbians to obtain useful estimates. We instead check the robustness of the lesbian wage penalty to a series of expanded specifications that include the interaction of sexual orientation with human capital and the interaction of sexual orientation with both family characteristics and year of observation. We begin by considering whether lesbians earn the same returns to their human capital, as measured by years of education and potential experience, as heterosexual women. The expectation that lesbians have higher returns to experience than heterosexual women reaches back to Badgett (1995). She argued that the typical proxy for potential experience (age minus five years) is more accurate for lesbian women because they are less likely to bear children, and therefore they are less likely to have interruptions in their careers. Excluding the lesbian*experience interaction would therefore overestimate the earnings of lesbians relative to heterosexual women. Jepsen (2007), Davenshary et al. (2008), Klawitter (2011) and others make similar arguments. Klawitter (2011) argues that labor market attachment explains much of the lesbian premium she documents. In Jepsen (2007), the lesbian*experience interaction term is smaller than previous estimates using earlier data, and including it considerably reduces the lesbian premium. In contrast, in our pooled GSS data, the penalty remains when sexual orientation and experience are interacted, as shown in tables 3 and 4. In table 7 we expand the specification to allow for 15 an interaction between lesbian sexual orientation and years of education. We do not find a statistical difference. –Table 7 about here – Note that allowing the returns to education to vary between heterosexual and lesbian women causes the statistical significance of the lesbian penalty in 2008 to fall below conventional levels for researcher-identified of lesbians, but causes the estimated penalty to increase and become statistically significant for both 2008 and 2010 for self-identified lesbians. As we discuss more below, the small number of observations of lesbians in many occupational groups limits our ability to pursue such an exercise. However, the small sample does not detract from our primary point: Our understanding of the history of employment outcomes for lesbians is quite sensitive to the way lesbian workers are identified. Table 8 shows that the divergence in patterns of changes in the wage differential by method of identification remains when we allow the “returns” to family characteristics to differ both across groups of women (specifications (1) and (3)) and over time (specifications (2) and (4)). We find no evidence of a difference in the returns to marriage or children between lesbian and heterosexual women in any year (only base year shown). These results are consistent with Jepsen (2007), who studies a period before the recent changes in laws regarding marriage equality and increases in the social acceptance of gay families discussed above.10 – Table 8 about here – We do, however, find a statistically significant marriage premium of about 10 Of course, marriage is a problematic variable for lesbians because they are still legally denied access to marriage in many states. We are unable to observe in GSS data whether lesbians who are cohabiting in marriage-like relationships identify as married. Further, demographic research has found that a large portion of lesbians do not formally register what would constitute a legally recognized relationship (Carpenter and Gates 2008). 16 seven percent for all women, while our estimate of the child penalty is not statistically significant. While evidence on the impact of marriage on women’s wages is mixed (Loughran and Zissimopoulos 2009), our estimate of the marriage premium for women is somewhat larger than the premium recently estimated by Killewald and Gough (2013). Our failure to capture a motherhood penalty is not entirely consistent with recent work that finds it to be approximately five percent (Budig and Hodges 2010). However, we note that the impact of motherhood on wages is heterogeneous: Lower-earning women experience a larger penalty than higher-earning women, and there is evidence of a motherhood premium among highly educated women (Amuedo-Dorantes and Kimmel 2005). The difference between our results and most may therefore be an artifact of either the co-incidence of the sample frame with the recession and recovery, of our inability to use a fully interacted model, or of including only full-time workers in our regressions. In particular, including only full-time workers is likely to under-estimate the motherhood penalty because mothers who expect large wage penalties are less likely to work full-time (Budig and England 2001). Changes in the wage differential across regions have the potential to drive patterns in the lesbian wage premium. Legal recognition of same-sex marriage, increased legal opportunities for lesbian and gay men to adopt children, and protection from discrimination (ENDAs) have increased fairly quickly, but not evenly across the U.S., as shown in Figure 2. In particular, the legal equality movement has proceeded more quickly in the West, Northeast and northern Midwest than it has in other regions. In table 9 we allow the lesbian wage differential to vary with region and across years. The interactions eliminate the statistical significance of the penalty for both self-identified and researcheridentified lesbians (specifications (1) and (2)) and increase the point estimates 17 of the premium for researcher-identified lesbians in 2012. Again, including the interactions does not eliminate the divergence in patterns over time between lesbians identified by the two different methods. – Table 9 and Figure 2 about here – Finally, we investigate the impact of occupational choices and the distribution of wages across occupations by allowing the returns to occupations to vary with sexual orientation and across years. We group respondents into broad occupational categories.11 As tables 2 and 6 show, there are small numbers of lesbians in some occupations. Many year-occupation cells are empty. Therefore, these results should be interpreted cautiously. Specification (2) of table 10 shows that the penalty for self-identified lesbians in 2010 is robust to allowing the returns to occupation to vary by sexual orientation. When we allow the returns to occupation to vary by sexual orientation and year, we find a penalty in 2008 but a premium for self-identified lesbians 2010 and 2012 (specification 2). This is the only specification in which results for self-identified lesbians converge to the results for researcher-identified lesbians. –Table 10 about here – The biggest difference in occupations between heterosexual and lesbian women (regardless of method of identification) is the over-representation of lesbians among managers and supervisors. Of course, this difference may simply be a side effect of the higher returns to experience. Then again, it could be an artifact of an unobserved difference in personality characteristics or workplace behaviors. 11 Occupations include: Managers & Supervisors, Professional, Teaching/Social Work, Allied Health, Support, Sales, Personal Service, Agricultural, Construction & Technology, and Laborer. These categories are based on the 2010 Standard Occupational Classification codes of the U.S. Census. 18 The Role of Employment Status While a full accounting of the causes of differing patterns over time in the experiences of self-identified and researcher-identified lesbians is beyond the scope of the current paper, we show in table 11 that the difference in patterns in wages is related to differences in employment status across years. We estimate by multinomial logit: ŷi = β1 Li + β2 Yit + β3 (Li ∗ Yit ) + βXi + i (2) where yi equals 0 if respondents are not working, 1 if working part-time and 2 if working full-time. All variables are defined as in previous sections, and we add a proxy for non-labor income in Xi .12 Table 11 presents marginal effects calculated at the mean for each outcome of the dependent variable. Researcher-identified lesbians experienced the same relatively good employment outcomes as heterosexual women during the recession (see, for example, Hartmann 2010). There were no significant differences between researcheridentified lesbians and heterosexuals in the propensity to work full or part-time in any year. In contrast, self-identified lesbians were approximately 27 percent less likely to work full-time and 16 percent more likely to work part-time in 2008 than heterosexual women. –Table 11 about here– The differences in the work status regressions are consistent with the timing of the differences in wage differentials because the wage/income measure in the GSS is retrospective – it refers to income for past year – while work status question refers to the past week. If self-identified lesbians worked less in 2008 and 2009, their lower incomes and hourly wages are captured in the 2010 12 Non-labor income is proxied as total income minus respondent’s income, which is the same proxy utilized in (Martell 2014). 19 survey. These underemployed workers may have been more likely to change jobs in 2008 and 2009, and were also likely to have been among those most burdened by the recession (Biddle and Hammermesh 2013; Elsby, Shin, and Solon 2013). The signs and significance of the marginal effects of control variables (presence of children, education and marriage) are consistent with the existing literature. This pattern is robust to including interactions for marriage and children, but interacting lesbian and education removes the significance of the marginal effect of the recession on work status for all classification techniques (not shown).13 There are not enough observations of lesbians in the GSS to to solve the puzzle of the emerging lesbian wage puzzle completely. We have shown that the lesbian wage penalty is robust to a variety of empirical specifications and likely related to varying employment patterns between heterosexual and lesbian women. However, the GSS does not have enough observations to fully investigate the occupational attainment of lesbians or the source of the disproportionate impact of the recession on lesbians. It is clear, however, that the size and persistence of the lesbian wage differential depends upon whether a lesbian claims the label herself or whether it is assigned to her by the researcher. Conclusion This paper makes two contributions to the literature on the earnings differentials between lesbians and heterosexual women. First, while the bulk of 13 When we include the lesbian*occupation interaction self-idenified and researcheridentified lesbians are both more likely to be unemployed and less likely to work full time in 2008. The convergence of estimates only occurs with the occupation interactions, which mirrors the results for wage differentials. 20 the existing literature finds a lesbian premium, we find evidence of a lesbian wage penalty of roughly 50 percent for self-identified lesbians in 2010, and an even larger penalty for researcher-identified lesbians in 2008. We know little about the experience of gays and lesbians in economic downturns, but finding of a lesbian penalty in any recent year using any method of identification is surprising given changes in public opinion and the expansion of non-discrimination laws. The GSS data suggest that self-identified lesbians were hit harder by the recession than other groups, but the results are not conclusive. As more data become available, future research should investigate the mechanism through which the disadvantage manifested during the recession. In particular, it should investigate selection into occupations and into parenthood for lesbians. More fundamentally, we show that the method of identifying lesbians is important for the measurement of wage differentials. The shortcomings of behavioral definitions of lesbians and of the use cohabitation based data are well known. The existing literature acknowledges that cohabitation based data excludes single lesbians and that selection into marriage like relationships varies by sexual orientation (Carpenter and Gates 2008). However, to our knowledge, we are the first to demonstrate that mis-classification matters to our understanding of the history of labor market outcomes for homosexuals. 21 22 GSS 1989-1991 GSS & 1992 NHSLS* GSS 1989-1996 GSS 1989-1996 GSS 1991-1996 GSS 1994-2002 GSS 1988-2006 1990 U.S. Census 1990 U.S. Census 2000 U.S. Census (state of MA only) 2000 U.S. Census 2000 U.S. Census 2000 Census 2000 Census 2000 Census 2000 Census 2000 Census 2004 CPS BRFSS 1996-2000** CHIS 2001*** and GSS Badget (1995) Badgett (2001) Blandford (2003) Black et al. (2003) Berg and Lien (2002) Comolli (2005) Cushing-Daniels and Yeung (2009) Klawitter and Flatt (1998) Clain and Leppel (2001) Albelda et al. (2005) Gates (2009) Antecol et al. (2007) Daneshevary, Waddoups, and Wimmer (2008) Daneshevary, Waddoups and Wimmer (2009) Klawitter (2011) Baumle and Poston (2011) Jepsen (2007) Elmslie and Tebaldi (2007) Carpenter (2004) Carpenter (2005) Sexual Behavior Sexual Behavior Sexual Behavior Sexual Behavior Sexual Behavior Sexual Behavior Sexual Behavior Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Cohabitation Status Self-reported Self-reported and Sexual Behavior Method of ID Insignificant premium Insignificant premium Premium Premium Premium Premium Insignificant penalty Premium, but household penalty Premium Premium Premium Premium Premium, gap higher with less education Wages of never-married lesbians highest Premium Premium Premium Insignificant premium Household income penalty Insignificant penalty Findings for Lesbians Notes: * National Health and Nutrition Survey, **Behavioral Risk Factor Surveillance Survey, ***California Health Interview Survey. Data Study Table 1: Studies of lesbian wage and income differentials in the U.S. by data source. Table 2: Descriptive statistics for self-identified lesbians. Self-Identified Lesbian Mean St. Dev. 2.58 1.11 10.26 1.03 Log(Wages) Log(Earnings) Heterosexual Mean St. Dev. 2.62 0.81 10.27 0.82 Years of Educ. Potential Exp. Married Num. Children White Metro 14.97 20.16 0.18 0.82 0.84 0.21 2.69 10.42 0.39 0.93 0.37 0.41 14.26 24.02 0.45 1.64 0.75 0.15 2.89 12.87 0.50 1.43 0.43 0.36 Occupation Man & Sup Professional Teach/Soc Wok Allied Health Support Sales Pers Svc Ag Constr & Tech Laborer Total N 13 5 2 6 5 1 4 0 1 1 38 Percent 0.34 0.13 0.05 0.16 0.13 0.03 0.11 0.00 0.03 0.03 1.00 N 221 107 120 117 204 78 123 5 9 76 1,060 Percent 0.21 0.10 0.11 0.11 0.19 0.07 0.12 0.00 0.01 0.07 1.00 Region New England Mid Atlantic E. No. Central W. No. Central So. Atlantic E. So. Central W. So. Central Mountain Pacific Total N 2 5 5 2 10 1 4 7 2 38 Percent 0.05 0.13 0.13 0.05 0.26 0.03 0.11 0.18 0.05 1.00 N 49 147 165 81 235 68 104 80 131 1,060 Percent 0.05 0.14 0.16 0.08 0.22 0.06 0.10 0.08 0.12 1.00 Note: Full-time workers only. 23 24 (2) SID Log(W ) −0.349 (0.350) −0.505∗ (0.300) −0.040 (0.284) 0.048∗∗∗ (0.007) 0.023∗∗ (0.011) −0.026 (0.050) −0.013 (0.049) Y es Y es 1093 0.399 (3) SID Log(W ) −0.607∗ (0.333) 0.027 (0.309) 0.392 (0.331) 0.038∗∗∗ (0.006) 0.018∗ (0.010) −0.021 (0.048) 0.024 (0.048) Y es Y es 1438 0.317 (4) SID Log(E) −0.325 (0.297) −0.343 (0.257) 0.059 (0.222) 0.058∗∗∗ (0.007) 0.021∗∗ (0.009) −0.041 (0.051) −0.044 (0.050) Y es No 1098 0.370 (5) SID Log(E) −0.339 (0.305) −0.344 (0.263) 0.110 (0.242) 0.054∗∗∗ (0.007) 0.018∗ (0.009) −0.001 (0.048) 0.011 (0.047) Y es Y es 1098 0.442 (6) SID Log(E) −0.543∗∗ (0.265) 0.006 (0.256) 0.327 (0.262) 0.062∗∗∗ (0.005) 0.017∗∗ (0.008) −0.035 (0.049) −0.036 (0.048) Y es Y es 1754 0.360 Note: Specification follows Badgett (1995). Full-time workers only in Columns 1, 2, 4, and 5. Full-time and part-time workers in columns 3 and 6. All specifications include a squared term in experience and controls for years of education, race, marital status and residence in a large metro area. Robust standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. Regions Occupations Observations R2 Year = 2012 Year = 2010 Lesbian*Exp Experience Lesbian*2012 Lesbian*2010 Lesbian (1) SID Log(W ) −0.296 (0.332) −0.529∗ (0.287) −0.062 (0.260) 0.051∗∗∗ (0.008) 0.024∗∗ (0.011) −0.060 (0.052) −0.065 (0.050) Y es No 1093 0.344 Table 3: Penalty for self-identified lesbians in pooled GSS sample. 25 (2) RID 5Y Log(W ) −0.804∗∗∗ (0.288) 0.514∗ (0.292) 0.913∗∗∗ (0.268) 0.038∗∗∗ (0.006) 0.013 (0.009) −0.045 (0.048) 0.002 (0.048) Y es Y es 1438 0.321 (3) RID 5Y Log(E) −0.715∗∗ (0.292) 0.293 (0.266) 0.610∗∗∗ (0.237) 0.053∗∗∗ (0.007) 0.017∗∗ (0.008) −0.029 (0.047) −0.009 (0.047) Y es Y es 1098 0.443 (4) RID Half Log(W ) −0.760∗∗ (0.313) 0.038 (0.347) 0.389∗ (0.224) 0.047∗∗∗ (0.007) 0.023 (0.014) −0.048 (0.050) −0.018 (0.049) Y es Y es 1093 0.395 (5) RID Half Log(W ) −0.772∗∗ (0.322) 0.332 (0.363) 0.716∗ (0.380) 0.039∗∗∗ (0.006) 0.017 (0.012) −0.028 (0.049) 0.028 (0.048) Y es Y es 1438 0.316 (6) RID Half Log(E) −0.469 (0.323) −0.084 (0.384) 0.136 (0.270) 0.054∗∗∗ (0.007) 0.017 (0.015) −0.014 (0.047) 0.013 (0.047) Y es Y es 1098 0.439 Note: Specification follows Badgett (1995). Full-time workers only in columns 1, 3, 4 and 6. Full-time and part-time workers in columns 2 and 4. All specifications include a squared term in experience and controls for years of education, race, marital status and residence in a large metro area. Robust standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. Regions Occupations Observations R2 Year = 2012 Year = 2010 Lesbian*Exp Experience Lesbian*2012 Lesbian*2010 Lesbian (1) RID 5Y Log(W ) −0.720∗∗ (0.334) 0.147 (0.300) 0.606∗∗ (0.268) 0.046∗∗∗ (0.007) 0.019∗∗ (0.009) −0.054 (0.049) −0.037 (0.049) Y es Y es 1093 0.399 Table 4: Penalty for researcher-identified lesbians in pooled GSS sample. Table 5: Penalty for intersection and union of self-identified and researcheridentified groups. Lesbian Lesbian*2010 Lesbian*2012 Experience Lesbian*Exp Year = 2010 Year = 2012 Regions Occupations Observations R2 (1) Both Log(W ) −0.543 (0.385) −0.301 (0.312) 0.229 (0.314) 0.047∗∗∗ (0.007) 0.024∗∗ (0.011) −0.034 (0.050) −0.018 (0.049) Y es Y es 1093 0.398 (2) Both Log(W ) −0.761∗∗ (0.353) 0.216 (0.343) 0.819∗∗ (0.340) 0.038∗∗∗ (0.006) 0.018 (0.011) −0.027 (0.048) 0.017 (0.048) Y es Y es 1438 0.318 (3) Either Log(W ) −0.570∗ (0.321) −0.048 (0.293) 0.384 (0.258) 0.047∗∗∗ (0.007) 0.019∗∗ (0.009) −0.046 (0.049) −0.032 (0.049) Y es Y es 1093 0.398 (4) Either Log(W ) −0.677∗∗ (0.280) 0.330 (0.271) 0.599∗∗∗ (0.267) 0.038∗∗∗ (0.006) 0.014 (0.008) −0.039 (0.048) 0.010 (0.049) Y es Y es 1438 0.318 Note: Specification follows Badgett (1995). First specification in each pair includes full-time workers only; second specification includes full-time and parttime workers. All specifications include a squared term in experience and controls for years of education, race, marital status and residence in a large metro area. Robust standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. 26 27 N 15 4 4 8 4 3 6 0 1 2 47 N Occupation Man & Sup Professional Teach/Soc Wok Allied Health Support Sales Pers Svc Ag Constr & Tech Laborer Total Region New England Mid Atlantic E. No. Central W. No. Central So. Atlantic E. So. Central W. So. Central Mountain Pacific Total 1 5 5 1 14 2 6 6 7 47 14.28 19.26 0.21 0.98 0.87 0.15 Years of Educ. Potential Exp. Married Num. Children White Metro Log(Wages) Log(Earnings) Percent 0.02 0.11 0.11 0.02 0.30 0.04 0.13 0.13 0.15 1.00 Percent 0.32 0.09 0.09 0.17 0.09 0.06 0.13 0.00 0.02 0.04 1.00 2.47 11.15 0.41 1.11 0.34 0.36 Lesbian Mean St. Dev. 2.46 1.03 10.13 1.00 Percent 0.05 0.14 0.16 0.08 0.22 0.06 0.10 0.08 0.12 1.00 Percent 0.21 0.10 0.11 0.11 0.20 0.07 0.12 0.00 0.01 0.07 1.00 2.90 12.84 0.50 1.43 0.44 0.36 0 3 4 0 6 1 1 2 3 20 N 6 2 3 1 2 2 1 0 0 3 20 N 14.90 20.25 0.10 0.90 0.80 0.20 Percent 0.00 0.15 0.20 0.00 0.30 0.05 0.05 0.10 0.15 1.00 Percent 0.30 0.10 0.15 0.05 0.10 0.10 0.05 0.00 0.00 0.15 1.00 2.92 11.35 0.31 0.97 0.41 0.41 N 51 149 166 83 239 68 107 85 130 1,078 N 228 110 119 122 207 77 126 5 10 74 1,078 14.27 23.95 0.45 1.63 0.75 0.15 Percent 0.05 0.14 0.15 0.08 0.22 0.06 0.10 0.08 0.12 1.00 Percent 0.21 0.10 0.11 0.11 0.19 0.07 0.12 0.00 0.01 0.07 1.00 2.88 12.83 0.50 1.43 0.43 0.36 Heterosexual Mean St. Dev. 2.63 0.81 10.28 0.82 Researcher-Identified (5Y) Lesbian Mean St. Dev. 2.48 1.18 10.19 1.17 Note: Full-time workers only. N 50 147 165 82 231 67 102 81 126 1,051 N 219 108 118 115 205 76 121 5 9 75 1,051 14.28 24.09 0.45 1.64 0.75 0.15 Heterosexual Mean St. Dev. 2.63 0.81 10.28 0.82 Researcher-Identified (5Y) Table 6: Descriptive statistics for researcher-identified lesbians. Table 7: Changes in the lesbian wage differential from 2008-2012, allowing returns to experience and education to interact with sexual orientation. (1) SID Lesbian Lesbian*2010 Lesbian*2012 Experience Lesbian*Exp Years Education Lesbian*Educ Regions Occupations Observations R2 −1.040∗ (0.621) −0.539∗ (0.294) −0.054 (0.272) 0.048∗∗∗ (0.007) 0.019∗ (0.011) 0.109∗∗∗ (0.010) 0.052 (0.040) Y es Y es 1093 0.400 (2) RID 5Y −0.707 (0.615) 0.148 (0.314) 0.605∗∗ (0.267) 0.046∗∗∗ (0.007) 0.020∗∗ (0.010) 0.110∗∗∗ (0.010) −0.001 (0.047) Y es Y es 1093 0.399 Note: Full-time workers only. All specifications include a squared term in experience and controls for years of education, race, and residence in a large metro area. Robust standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. 28 Table 8: Changes in the lesbian wage differential from 2008-2012, allowing returns to family characteristics to interact with sexual orientation. Lesbian Lesbian*2010 Lesbian*2012 Children Lesbian*Children Married Lesbian*Married Regions Occupations Observations R2 (1) SID (2) SID −0.330 (0.366) −0.477∗ (0.283) −0.151 (0.306) −0.017 (0.016) −0.184 (0.152) 0.073∗ (0.041) 0.364 (0.406) Y es Y es 1093 0.401 −0.223 (0.472) −0.526 (0.624) −0.511 (0.555) −0.017 (0.016) −0.361 (0.372) 0.073∗ (0.041) 0.635 (0.510) Y es Y es 1093 0.404 (3) RID 5Y (4) RID 5Y −0.790∗∗ (0.369) 0.170 (0.316) 0.609∗∗ (0.266) −0.020 (0.016) 0.048 (0.101) 0.073∗ (0.042) 0.244 (0.319) Y es Y es 1093 0.400 −0.983∗∗ (0.469) 0.363 (0.501) 0.717 (0.444) −0.020 (0.016) 0.158 (0.209) 0.072∗ (0.042) 0.311 (0.689) Y es Y es 1093 0.402 Note: Full-time workers only. All specifications include a squared term in experience and controls for years of education, race, and residence in a large metro area. Robust standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. 29 Table 9: Changes in the lesbian wage differential from 2008-2012, allowing returns to region to interact with sexual orientation. Lesbian Lesbian*2010 Lesbian*2012 Regions Lesbian* Region Lesbian*Reg*Year Occupations Observations R2 (1) SID (2) SID −0.187 (0.280) −0.083 (0.263) 0.092 (0.296) Y es Y es No Y es 1093 0.404 −0.041 (0.191) −1.009 (0.729) −0.393 (0.281) Y es Y es Y es Y es 1093 0.407 (3) RID 5Y (4) RID 5Y 0.010 (0.167) 0.348 (0.289) 0.555∗∗∗ (0.258) Y es Y es No Y es 1093 0.405 −0.019 (0.173) 0.945∗∗∗ (0.273) 1.590∗∗∗ (0.500) Y es Y es Y es Y es 1093 0.408 Note: Full-time workers only. All specifications include a squared term in experience and controls for years of education, race, and residence in a large metro area. Robust standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. 30 Table 10: Changes in the lesbian wage differential from 2008-2012, allowing returns to occupation to interact with sexual orientation. (1) SID Lesbian Lesbian*2010 Lesbian*2012 Regions Occupations Occ*Lesbian Occ*Lesbian*Year Observations R2 −0.267 (0.364) −0.486∗ (0.317) −0.028 (0.288) Y es Y es Y es No 1093 0.404 (2) SID −0.795∗∗∗ (0.279) 0.290∗ (0.180) 0.567∗∗∗ (0.159) Y es Y es Y es Y es 1093 0.409 (3) RID 5Y (4) RID 5Y −0.716∗∗∗ (0.282) 0.043 (0.258) 0.527∗∗ (0.287) Y es Y es Y es Y es 1093 0.404 −0.502∗∗∗ (0.211) 0.283∗∗ (0.146) 0.441∗∗∗ (0.125) Y es Y es Y es No 1093 0.415 Note: Full-time workers only. All specifications include a squared term in experience and controls for years of education, race, and residence in a large metro area. Robust standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. 31 32 0.112 (0.108) 0.019 (0.112) 0.703 (27.771) −0.004 (0.004) −0.010∗∗∗ (0.002) −0.029 (0.024) −0.022 (0.025) 1742 0.158∗ (0.094) −0.096 (0.096) −1.960 (91.930) −0.002 (0.004) −0.013∗∗∗ (0.002) 0.015 (0.022) 0.005 (0.022) 1742 (2) SID Part-Time −0.269∗∗ (0.133) 0.077 (0.132) 1.257 (64.159) 0.006 (0.005) 0.023∗∗∗ (0.003) 0.014 (0.027) 0.017 (0.028) 1742 (3) SID Full-Time 0.116 (0.102) 0.010 (0.119) 0.736 (26.443) −0.010∗ (0.006) −0.009∗∗∗ (0.002) −0.027 (0.024) −0.024 (0.025) 1742 (4) RID 5Y Unemployed 0.002 (0.089) 0.044 (0.094) −1.885 (88.123) 0.003 (0.004) −0.013∗∗∗ (0.002) 0.008 (0.022) 0.002 (0.022) 1742 (5) RID 5Y Part-Time −0.118 (0.121) −0.054 (0.131) 1.149 (61.680) 0.007 (0.005) 0.023∗∗∗ (0.003) 0.019 (0.027) 0.021 (0.028) 1742 (6) RID 5Y Full-Time Note: Table shows estimated marginal effects from a multinomial regression. All specifications include a squared term in experience and controls for years of education, race, residence in a large metro area and non-labor income. Standard errors in parantheses. * Significant at 10 % ** Significant at 5 % *** Significant at 1 %. Observations Year = 2012 Year = 2010 Experience Lesbian*Exp Lesbian*2012 Lesbian*2010 Lesbian (1) SID Unemployed Table 11: Work status of self-Identified and researche-identified lesbians. When RID defined as homosexual behavior in last 5 years n=16, 2.4 years younger, 0.4 more children, less likely married, 3 years less ed n=31 n=7 SID not RID RID not SID Both RID & SID When RID defined as half of adult partners of same sex n=25, 0.9 years older, 0.6 fewer children, 0.9 years more ed n=13 n=7 RID not SID Both RID & SID SID not RID Figure 1: Comparing groups of self-identified and researcher-identified lesbians. 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