Research presentation Zoltán Lippényi. The changing sexual orientation earnings gap: a panel decomposition approach.

The changing sexual orientation earnings gap: a panel decomposition approach Zoltán Lippényi

The last few decades saw significant shifts in Western societies regarding gender and sexual norms and institutional opportunities of partnership, marriage, and adoption rights of gay and lesbian people. However, we have little knowledge of how earnings differentials between sexual majority and minorities changed in this period. Evidence on sexual orientation-based pay inequality comes exclusively from cross-sectional studies. We also lack insights into how human capital, household, work industry, and employer characteristics of sexual minorities and the majority changed and whether they contributed to changing pay inequality.

This paper builds on longitudinal linked employer-employee register and labor force survey data of more than 1 million workers to study earnings differentials between gay/bisexual and heterosexual male employees in the Netherlands between 2010-2018. I apply panel Kitagawa-Oaxaca-Blinder regression decompositions to yearly sexual orientation labor earnings gaps and decomposition of over-time changes to assess the role of changing human capital, household, industry, and workplace compositional characteristics for earnings inequality. We witness a diminishing pay disadvantage of gay/bisexual workers among Dutch male employees predominantly driven by compositional changes.

The paper introduces a new strategy to incorporate workplace and industry in earnings decompositions, allowing direct comparisons with human capital and household components. This new decomposition strategy reveals that a substantial part of the compositional effect stems from unequal access to high-resource workplaces. Changes in earnings differentials are driven mainly by gay/bisexual workers' increasing access to higher-resource organizations.