Sexual orientation–based wage gaps in Australia: The potential role of discrimination and personality

Abstract

This article reports a research finding that lesbians in Australia earn an unexplained wage premium of 0%–13%, whereas gay men experience an unexplained negative wage gap of 8%–18%. Based on data from the Australian household panel Household Income and Labour Dynamics in Australia, the article is the first to establish these gaps in Australia, and to examine the degree to which credence can be afforded to claims that endowments such as personality traits may help explain such wage differentials. Using ordinary least squares and Blinder–Oaxaca decomposition methods, the study explicitly includes the battery of Big Five personality traits in wage regressions and estimates the contribution of endowments and returns to these traits. The finding is that personality traits and returns to them do not differ along lines of sexual orientation. Gay men in particular suffer a substantial unexplained wage penalty in the workplace. Such unexplained differences suggest that discrimination on the basis of sexual orientation, though unlawful, may exist in Australia.