Sexual orientation, labour supply and occupational sorting in Canada

• Date: 01 July 2018
• Published date: 01 July 2018
• DOI: http://doi.org/10.1111/irj.12223
• Author: Maryam Dilmaghani

Sexual orientation, labour supply and

occupational sorting in Canada

Maryam Dilmaghani

ABSTRACT

Using five consecutive cycles of the Canadian General Social Survey covering

2010–14, the present article examines the differences in the labour supply and occupa-

tional sorting of partnered men and women by sexual orientation. Conditional on

being gainfully employed, lesbians are found to have a higher labour supply than

heterosexual women, even controlling for factors such as the number of children

and the characteristics of the spouse. The reverse is true for gay men. The analysis

of occupational structure shows that lesbians are more likely to sort into male-

dominated occupations, while the reverse is true for gay men. The findings of this

article have implications for the correct interpretation of the sexual orientation

related earnings gaps.

1 INTRODUCTION

This article, using pooled data from the Canadian General Social Surveys (GSS) of

2010–14, examines the impact of sexual orientation on labour supply of partnered

men and women in Canada. This question is important for several reasons. First, a

growing literature spanning three decades has been concerned with the possibility of

differential treatment toward sexual minorities in the labour market (Badgett, 1995;

Badgett and Frank, 2007; Carpenter and Eppink, 2017; Dilmaghani, 2017a;

Klawitter, 2015; Ozeren, 2014). Recent experimental studies strongly support that

sexual minorities face discrimination in the hiring process, even in the contexts where

survey data show an income premium for them (Ahmed, Andersson and

Hammarstedt, 2013; Drydakis, 2015; Tilcsik, 2011; Weichselbaumer, 2015). Hiring

discrimination not only causes an earnings differential (Becker, 1957; Phelps, 1972)

but also induces a lower labour supply, as the unfavourably treated job seeker may

give up on the search (Goldsmith, Sedo, Darity and Hamilton, 2004) or accept a

part-time employment (Tebaldi and Elmslie, 2006). Moreover, hiring discrimination

can lead to occupational segregation, which has implications for earnings (Elmslie

and Tebaldi, 2007) and human capital return (Neal, 1995).

Second, a burgeoning strand of scholarship is concerned with the impact of sexual

orientation on within-household distribution of labour (Ahmed, Andersson and

Hammarstedt, 2011; Jepsen and Jepsen, 2006). Becker (1981) argued that efficiency

considerations induce partners to specialise in either marketlabour or home production.

❒Maryam Dilmaghani, Associate Professor, Department of Economics, Sobey School of Business, Saint

Mary’s University, Halifax, NS, Canada. Correspondence should be addressed to: Maryam Dilmaghani,

Department of Economics, Sobey School of Business, Saint Mary’s University, Halifax, NS, Canada;

email: maryam.dilmaghani@smu.ca

Industrial Relations Journal 49:4, 298–318

ISSN 0019-8692

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd

Becker (1981) implies that the sameness of sex in homosexual couples redu ces the

efficiency gains of specialisation. Therefore, owing to a more egalitarian distribution of

householdtasks, lesbiansshould have a higher laboursupply than partneredheterosexual

women.Partnered gay men, on the otherhand, should generallyhave a lower labour sup-

ply thantheir heterosexual counterparts. Thecomparison of laboursupplies of partnered

homosexual and heterosexual men and women contributes to this strand of literature.

Third, due to the data limitations, many of the studies of sexual orientation related

earnings gaps use annual income instead of hourly wage. If substantial sexual orien-

tation related differences in labour supply or occupational sorting exist, biases can be

introduced by omitting the number of hours worked or the occupational category

(Buser, Geijtenbeek and Plug, 2015). If lesbians work more than heterosexual women,

their typically reported earnings advantage may be overestimated. Likewise, if

lesbians are more likely to be employed in male-dominated occupations which usually

pay more, the extent of their labour market advantage is biased upward (Antecol,

Jong and Steinberger, 2008). Regarding gay men, their possible lower hours worked,

or their sorting into female-dominated occupations, may partly explain their

consistently documented income disadvantage (Antecol et al., 2008; Berg and Lien,

2002; Elmslie and Tebaldi, 2007). This article examines the impact of sexual orienta-

tion on extensive and intensive margin labour supply, previously examined using 2002

and 2005 Canadian data (Carpenter, 2008).

Canada had enacted a federal anti-discrimination protection law for sexual minor-

ities in 1996. But, only in July 2005, same-sex marriage became legally recognised

nationwide. This legal change, reflecting an attitudinal shift in the population, has

potentially affected homosexuals and their socio-economic outcomes beyond their

marital status. The scholarship on the labour supply differentials associated with

sexual orientation in Canada has not been updated since Carpenter (2008), which uses

data from pre-legal recognition of same-sex marriage. In addition to updating the

literature, the present article examines the patterns of occupational sorting by sexual

orientation, performed for the first time using Canadian data. The analysis reveals

that partnered homosexual men do not differ from comparable heterosexual men in

their likelihood of employment, but work fewer hours. Partnered lesbians, also

equally likely to be gainfully employed as partnered heterosexual women, work more

hours. Finally, the analysis shows that gay men are more likely to sort into female-

dominated occupations, while the reverse can be held for lesbians. The remainder

of this article is organised as follows. Section 2 reviews the related literature.

Section 3 presents the data and the methodology. The results are discussed in

section 4. The concluding remarks follow.

2 LITERATURE REVIEW

Experimental methodology is the most appropriate way to investigate the existence

of discrimination in the hiring process (Weichselbaumer, 2015). To experimentally

test labour market discrimination, the ‘correspondence testing’is often used

(Newman, 1978). In this experiment, job applications from demographically different

individuals with identical qualifications are sent in response to job advertisements.

The differences in the interview invitation rates by applicant type stand as evidence

for discrimination. The Canadian sociologist and LGBT activist Barry Adam

(1981) was the first to use the correspondence testing to investigate sexual orientation

related discrimination. Although heterosexuals received higher call backs, the

299Sexual orientation and labour supply in Canada

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd