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Women’s Sexual Orientation and Labour Market Outcomes
Dr Drydakis Nick
Abstract: This study provides evidence on the relationship between lesbian women and their hiring prospects by employing the Correspondence Test forGreece. The data analyzed supports the findings of previous experiments and indicates that hiring discrimination against lesbians is present. More importantly, entry wage differentials assigned are not consistent with the ascendant empirical claims that lesbians have higher market earnings. Our findings suggest that currently lesbians both anticipate and encounter job discrimination.
1. Introduction
An important factor in understanding the lack of visibility of gays and lesbians and their issues in Greek society is the hostile social and public policyclimate. Supporters of gay rights have typically framed their arguments in terms of justice and equal treatment, whereas opponents use traditions, religious teachings and arbitrary arguments to justify their active opposition to the enactment of current and forthcoming European policies designed to protect gay people from unpleasant discrimination. At the governmental level, homosexuality remains stigmatized through unequal practices. The lack of legal recognition of family structures, the persistence of threats, the perpetuation of false stereotypes, and the lack of political will shown by the authorities in the fight against discrimination are demonstrative of such attitudes (Vlami [2007]). Prejudice is ofgrave concern, aggravated by the current Eurobarometer (2007) evidence. The data suggest that Greece is one of the most puritanical societies in Europe when itcomes to general attitudes toward homosexuality: 85% of Greek respondents feelthat homosexuality is taboo, compared to 48% of European Union individuals.
There are ample case studies with evidence to suggest that sexual orientation minorities are victims of biased attitudes. Representatives of the Greek Orthodox Church have declared open war on the country’s same-sex marriage supporters, keeping pace with the government. The Church criticizes the “impudence and shame of gay partnerships”, asserting that “gay people warp human nature with unspeakable, unnatural acts”. This argument contradicts the scientific findings that homosexuals are equivalent to heterosexuals in expressed psychological symptomatology (Kurdek [1997], Cochran et al. [2003], Kurdek[2004]), that gay and lesbian couples report levels of relationship quality indistinguishable from those reported by married heterosexual couples (Howard etal. [1987], Patterson [2000]) and that children raised by homosexuals do not experience adverse outcomes compared with children raised by heterosexuals(Bailey et al. [1995], Anderssen et al. [2002], Golombok et al. [2003]), Patterson[2006]).
A tricky issue hit the Greek courts in 2008. Campaigners from the islandof Lesbos had decided to resort to the court system to prevent the largest gay andlesbian community of Greece from using the word “lesbian”2 in its title. The campaigners claim that the international prominence of the word “lesbian” in its sexual context violates the human rights of the islanders and disgraces them around the world. This incident provides a strong sense of how prejudice can overshadow the lives of sexual orientation minorities in Greece.
Anti-lesbian and anti-gay prejudice manifests the same social structure anddynamics as racism and other prejudices against stigmatized groups. Historical,sociological, and psychological research demonstrate the existence of sexualstigma (the shared knowledge of society’s negative regard for any nonheterosexual behavior, identity, relationship or community), heterosexism (thecultural ideology that perpetuates sexual stigma) and sexual prejudice (individuals’ negative attitudes based on sexual orientation) and the effects that such attitudes have on the every day experiences of gays and lesbians (Herek[2004]).
Economists, on the other hand, have only recently explored the relationship between labour market outcomes and sexual orientation. Todetermine whether there exists discrimination against homosexual workers, a firststep was to compare the earnings of homosexuals to the earnings of heterosexuals. Briefly, wage regressions have documented lower incomes for gays, but they have repeatedly shown higher incomes for lesbians (Plug and Berkhout [2004]). Most studies seem to agree that earning discrimination against gay men is the dominating mechanism that explains the gaps, while lesbians’ premiums are rooted in optimal human capital accumulation. However, wage gaps are only one of the possible forms that discrimination can take. Labour legislation, for instance, focuses more frequently on discrimination in hiring, promotions and harassment.
Sexual minority workers throughout Europe have repeatedly claimed thatthey are made victims of discrimination in employment by being fired, not hiredor not promoted because of their orientation (De Schutter [2008]). To redress this wrong, they have turned to employers, legislative bodies and the courts, demanding laws and personnel policies that bar such prejudice. Those incidents have indicated to many policy makers that racism and other forms of discrimination could jeopardise the European Community’s aims of full market integration and social cohesion. Recently, legislators have moved toward a public policy that the labour market treatment of individuals should be based on their productivity rather than on their sexual orientation.
New Greek law prohibiting discrimination on the grounds of sexual orientation (2005/3304) came into force in January 2005 under the European Union’s Employment Equality Directive 2000/78. According to this legislation, employment equality applies to everyone, regardless of their sexual orientation. The goal of this Directive is to ensure that everybody living in the European Union can benefit from effective legal protection against discrimination. The Union’s priority is to enhance its ability to integrate its entire membership into a new arrangement of active citizenship, ensuring the long-term well-being of all ina diverse society.
The Greek lesbian movement has long pointed out through case studies that there is widespread prejudice against lesbians in the work force and that it causes them economic and psychological harm (Petropoulou and Skoutari [2008]).Yet, in Greece, there are no samples that include the sexual orientation of individuals for investigation of this discrimination hypothesis, and social science surveys contain no data drawn using sampling of lesbian individuals for separate analysis. However, empirical research examining where wage differentials exist, although highly interesting, cannot provide information about labour market discrimination against equally productive lesbian workers. More importantly, disclosure or labeling of a lesbian employee’s sexual orientation is necessary; otherwise, the practice of hiding one’s sexual preference is likely to reduce the measurable impact of discriminatory behavior. Hence, an accurately measured signal of sexual orientation is crucial for credibly testing the discrimination hypothesis.
This study takes a different route to assessing differential treatment of sexual orientation minorities by using an experimental technique to gather representative data on the hiring stage for lesbians. In brief, the goal is to produce pairs of testers who each submit a written job application to the same firm. These fictitious applicants should be identical in all relevant characteristics so that any systematic difference in treatment within each pair can only be attributed to the effects of sexual orientation. For our purpose, following Adam (1981) and Weichselbaumer (2003), a lesbian applicant’s sexual orientation was disclosed through a reference in her curriculum vitae to volunteer work for a homosexual community organization. Since the theories of discrimination are valid only if the employer believes that the employee is a homosexual, this study focuses on agroup of people most likely to be viewed as homosexuals. The theoretical claim to be evaluated was that an applicant who was an activist in such a community might receive biased evaluations of his skills and profitability, diminishing hiring chances (Seidman [1994]).
Interestingly, in this study, we also examined whether sexual orientation affected wages at the beginning of working careers. By taking advantage of telephone callbacks and the naïve portfolios of the applicants, we have extended the application of this method by also gathering data concerning informal wage offers on the part of employers in cases of tentative hiring. We argue that this additional data set enabled us to further record discriminatory attitudes across. Traditional measures of wage discrimination have relied upon the analysis of observed wage differentials. Reimers (1983), however, has pointed out that if labour market discrimination is to be measured properly, the analysis should focus on the wagerate offered to individuals, regardless of whether they actually work in the wageand salary sector.
The data were gathered from September 2007 through July 2008 in Athens,the capital of Greece, as part of the Athens Area Study (AAS) conducted by the University of Crete. The 2007 AAS is one component of the Multi-City Study of the Scientific Center for the Study of Discrimination (SCSD). We tested the hypothesis that known lesbians have statistically different job market prospects. On average, we found that employers do little to grant equal opportunities and combat social exclusion. Despite the introduction of antidiscrimination legislation three years ago, the current results showed a strong negative effect of lesbian orientation on hiring chances. Similarly, sexual orientation does have a significant impact on the wages offered. Our results suggest that discrimination against lesbian applicants is both present and important.
In order to inform policy makers, one needs to know the performance ofsexual orientation minorities based on real-life evidence. Experimental economists are motivated to explain real-world issues. They want to provideknowledge and insights that are relevant either to improving the understanding of the world as it is or to helping solve the problems individuals face. One crucial benefit of the current methodology is that it offers a chance to examine an important aspect of discrimination in hiring that has been largely inaccessible tosocial scientists. Because of the absence of standardised, economy-wide data onhiring, there is much less evidence on discrimination in these important dimensions of labour market discrimination. Although discrimination in hiring can undoubtedly affect the magnitude of discrimination, most empirical studies face data limitations when focusing on differences in pay. Such estimates of wagediscrimination will almost certainly understate the full effects of sexual orientation discrimination by leaving out the fact that many applicants are barred from even earning a wage.
This research contributes to the small but growing body of literature on the economics of discrimination according to sexual orientation by presenting an assessment of the impact of this antidiscrimination legislation. In addition to providing evidence on sexual orientation-based differences in economic outcomes for a previously unstudied country, this research advances the literature in several ways. Our measure of sexual orientation is likely to be correlated with the concept of interest in living an openly lesbian lifestyle, and it is arguably better than thesexual behavior measures used in previous research. Due to lesbians’ reluctance to reveal their sexual orientation, collecting data on them is difficult, and analyzing such data presents challenges. The wage differential estimated in this paper was computed by taking into account the employer’s knowledge of the employee’s orientation. In this study, we examined whether discriminatory treatment existed in cases where the evidence seemed strongest: the various penalties for lesbianlabelled women.
The paper is organised as follows: section two provides a brief review ofthe existing literature on sexual orientation and economic outcomes, section three describes the methodology, section four presents the estimation framework, section five presents the main results and offers a discussion and the last section concludes the paper. (...)

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