Sexual Prejudices, Discrimination and Segregation

Erik Plug, Dinand Webbink, Nick Martin
University of Amsterdam, The Netherlands

In this paper we test whether employee discrimination against gay and lesbian workers leads to workplace segregation. Using data on sexual orientation, sexual prejudice (also called heterosexism or homophobia) and labor market outcomes from Australian Twin Registers, we find that (a) gays and lesbians shy away from prejudiced occupations; and (b) prejudiced straight workers avoid workplace contact with gay and lesbian workers. Our segregation results are robust to observed and unobserved productivity differences. Since employee discrimination against gay and lesbian fellow workers cannot be competed away by a competitive labor market, we also show that more schooling may serve as an alternative and effective tool to reduce sexual prejudices and (because of that) discrimination.

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