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International Journal of Economy, Management and Social Sciences, 2(10) October 2013, Pages: 808-813

TI Journals

International Journal of Economy, Management and Social Sciences

ISSN
2306-7276

www.tijournals.com

The Effects of Workers Sexual Orientation Disclosure in the


Workplaces
Luigi Bonaventura
Department of Economics and Business University of Catania, Italy.
AR TIC LE INF O

AB STR AC T

Keywords:

Discrimination and hostility in the workplace prevents homosexual workers from performing their
core functions on the job. Moreover, it introduces unnecessary costs by increasing absenteeism,
lowering productivity, and fostering a less motivated, less entrepreneurial, and less committed
workforce. By means an agent-based model we simulate the effects of an increasing of sexual
orientation disclosure in the workplaces. We test the effects on workers utiliy, firms profit, level of
satisfaction and segregation. The results show a complessive improvement of the firms
performances and a better job satisfaction for undeclared and homosexual workers and employers.
With a homosexual employer we can observe an increasing of homosexual utility and firm profit,
with a low decreasing of undeclared utility. Instead, with an undeclared employer the firms profit
decreases but the total effect is positive.
JEL J16; J71; M54.

Sexual orientation
Discrimination
Job satisfaction
Segregation

2013 Int. j. econ. manag. soc. sci. All rights reserved for TI Journals.

1.

Introduction

Can coming out as a gay man or a lesbian affects the job satisfaction in the workplace? Will employers and co-workers treat she/he
differently? What are the effects when employers and/or co-workers declare their sexual orientation? Can coming out increases the firms
performances or reduces the job segregation?
Discrimination and hostility in the workplace prevents homosexual workers from performing their core functions on the job. Moreover, it
introduces unnecessary costs by increasing absenteeism, lowering productivity, and fostering a less motivated, less entrepreneurial, and less
committed workforce. Based on a survey that collects information on U.S. workforce, including information on the workers sexual
orientation and workplace disclosure, we are able to examine the following issues. The first aim of this paper is to analyze the effects of
disclosuring of the sexual orientation by the workers and employers on the job. What are the effects on workers satisfaction and firm
performances by an increasing number of homosexual workers. Moreover, it will be analyzed the segregation effect in the workplaces by
homosexual coming out. This paper, by means an agent-based model, offers a comprehensive analysis of the effects of sexual orientation of
workers on the job.
The rest of the paper is organized as follows: Section 2 presents a brief survey of the major results of the sexual discrimination literature.
Section 3 discusses the theoretical framework used to support the agent-based model used to conduct the analysis. Section 5 presents the
simulation data and discusses the empirical findings; and Section 6 concludes.

2.

Related literature

The economic literature on discrimination against various groups is vast. Since Beckers (1957) seminal work, the subject has been a
primary research interest of labor economists. There is ample anecdotal and case-study evidence to suggest that lesbians and gay males are
discriminated against on the job as well as in housing (Blause 1989; Badgett 1995). Several studies (Badgett 2001; Blandford 2003; Clain
and Leppel 2001) suggest gay men and lesbians may experience very different labour market outcome, that is to say they may see very
different returns to their sexual orientation. I develop a theoretical argument like in Winfeld and Spielman (2001) that attempts to link the
treatment of gay men with that of lesbians, without any distinction between gay and lesbians, preferring the general term gay.
Most studies of labour market discrimination focus attention on wages or income. In recent years, the empirical literature on discrimination
(Badgett 1995, 2001) has begun to analyse the role played by sexual orientation in explaining the earnings gap. Surprisingly little additional
research has focused on the impact of a non-discrimination policy on gay employees. Historically, the presence of a non-discrimination
policy has been insufficient to promote behavioral change. However, non-discrimination policies do appear to influence sexual orientation
* Corresponding author.
Email address: lbonaventura@lex.unict.it

The Effects of Workers Sexual Orientation Disclosure in the Workplaces

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Internat ional Jour nal of Economy, Mana ge ment and Social Sciences , 2(10) October 2013

disclosure in the workplace. Burgess (1997), Badgett (2001) found a positive relationship between disclosure and working for an employer
with a non-discrimination policy. Winfeld and Spielman (2001), found that the presence of other gay and lesbians may facilitate a positive
work environment and the creation of supportive networks.
Determining the size of the lesbian and gay (LG) population is, at best, difficult, and at worst, impossible, due to the indirect nature of the
data collection. Because many people are not out, this provides additional counting difficulty. The empirical analyses suggest that there
are more than 8 million adults in the U.S. who are LG, comprising 3,5% of the adult population. For example, one survey of William
Institute (2011) found that in U.S. 23,8% of LG people were not out to anyone at work, and 48,8% of bisexual people were not out to
anyone at work. This survey determined that 37,7% of all out LG employees experienced discrimination, and 38,2% of out LG
employees experienced harassment. About 58% of LG workers reported that a coworker makes a joke or derogatory comment about LG
people, and have heard a negative comment about LG people by their supervisor.

3.

Conceptual framework

The economics literature demostrates the existence of homofobia (the fear of homosexuals and homosexuality) and heterosexism (the belief
that heterosexuality is superior to homosexuality and should be an enforceable social norm) and the effects that such attitudes have in the
labour market and economic life. If employers or co-workers have a distaste for gay identity, behavior, or lifestyle employers may
develop a taste for discrimination (Becker, 1971). Sexual orientation is not generally an observable characteristic and for the social stigma
attached to homosexuality to result in direct discrimination, disclosure of a gay employees sexual orientation is necessary.
The economics literature posits two major sources of discrimination: taste-based and statistical. In this model it will be used a combination
of these approaches. It will be assumed that undeclared employers (employers that didnt disclose their sexual orientation) dislike some
categories of the workforce, while undeclared workers prefer not to work with people from a specific sexual orientation (this is referred to
co-worker discrimination). The job satisfaction of a prejudiced undeclared worker depends whether she/he works or not with a
discriminated worker. Previous economic research on job satisfaction (Drydakis 2012) suggests the relation between job satisfaction and
sexual orientation disclosure by utilizing data from 2008 Athens Area Study. The satisfaction that gay employees derive from their jobs
could be viewed as a reflection of how they respond to job characteristics and it is therefore surprising that only few social scientists have
considered the understanding of a minority groups well-being

4.

The model set up

In this model prejudiced undeclared employers dislike working with people with observable sexual orientation. The profit
with an undeclared prejudiced employer is given by:

p un = f (Lun + Lho ) - w(Lun + Lho ) - d(

Lho
)
Lun + Lho

u n

of a firm

(1)

where Lu n and L h o are the number of undeclared and homosexual workers employed, f(.) is the production function, which is assumed
to be well-behaved, w is the wage the same for all workers, and d [ 0 , 1] is a taste for discrimination. In this framework, the parameter d
corresponds to the psychological cost of working with a homosexual worker, and enter in the profit function as a cost associated with the
fraction of homosexual workers on total workforce.
The profit h o for a firm managed by a homosexual employer is different by the previous one; she/he takes advantage from the presence
of homosexual oriented workers.

p ho = f (Lun + Lho ) - w(Lun + Lho ) + d(

Lho
)
Lun + Lho

(2)

In this case d represents a positive taste for homosexuality. Observe that, in this formulation, homosexual and undeclared workers are
equally productive, perfect substitutes and receive the same wage.
Consider that undeclared workers prefer not to work with homosexual people (this is referred to co-worker discrimination). The utility of
an undeclared prejudiced worker depends whether he/she works or not with homosexual workers. His/her utility in a firm that hires n
workers is given by:

Uun = w - d(

Lho
)
Lun + Lho

(3)

Luigi Bonaventura

810

Int ernational Journal of Economy, Mana ge ment and Soci al Sci ences , 2(10) October 2013

where w is the wage of the prejudiced undeclared worker, d is the taste for discrimination, and

Lho
is the fraction of homosexual
Lun + Lho

workers in the firm.


In this framework the homosexual workers have a different utility function compared to the undeclared co-workers. Their utility depends
on the level of wage w reduced by the cost of discrimination suffer discrimination that undeclared employer make on them calibrated on
the fraction of homosexual workers in the job.

U ho = w - d(

1
)
Lho
Lun + Lho

(4)

The model is a discrete-time model (t = 1, 2, ...n), and in every period each worker can redefine its position, moving from a job to another
one. The choice of worker depends on his/her job satisfaction that is determined by the difference between the individual utility and the
average utility on the job.
Every worker at each time decides if she/he is satisfied if:

Ui -

Lun + Lho

(5)

If, for a worker in a job, this difference exceeds zero, then she/he is satisfied and stays in that job. Otherwise, he/she is unsatisfied and goes
to another job. In the following model simulation the d (taste for discrimination, for homosexuality and suffer discrimination) is not a
parameter, but an individual variable random assigned.

5.

Simulation

The simulation was programmed in NetLogo (Wilesky 1999), the experiment design and calibration are aimed to fulfill some objectives.
First, we need to simulate the dynamics of aggregate workforce utility for different percentage of homosexual workers. Second, the amount
of profits for firms managed by homosexual employer and firms managed by undeclared employer. Third, the level of segregation and the
effects of different levels of sexual discrimination on workers job satisfaction.
Initially, the calibration of the experiments was based on the Badash (2012) american data. This choice is justified on the fact that the
american empirical investigations on the sexual orientation in the labour market are more complete than the other countries. The first
exercise was to run several simulations for different number of homosexual workers in a set of firms managed by undeclared and
homosexual employers. In order to identify what is the best range of homosexual variation, it will be used the survey of the William
Institute (2011) that found that about 24% of lesbian and gay people were not out to anyone at work. I run 500 experiments sampling the
percentage of homosexual workers in the range (4%, 30%) in firms with undeclared and with homosexual employers.
Table 1. Initial calibration
Parameter

Calibrated Value

workers

500

firms

20

1.5

1.5

perceived-discrimination

suffer-discrimination

random[0,1]

random[0,1]

The Effects of Workers Sexual Orientation Disclosure in the Workplaces

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Internat ional Jour nal of Economy, Mana ge ment and Social Sciences , 2(10) October 2013

The model simulates the dynamics of a productive system, in which undeclared and homosexual workers repeatedly interact each other
within a group of firms. At the beginning, there are homosexual and undeclared workers that are randomly employed in 20 firms. In each
time, everyone calculates his/her job satisfaction and decides to stay or change job.
5.1 Test simulation with undeclared employers
The test simulates the effects of a progressive increase (+2,5%) of homosexual workers, in a range (3%, 30%), on the homosexual and
undeclared workers utility in a group of 20 firms managed by undeclared employers. Moreover, we will calculate the effects on the firms
profit, the level of segregation and the workers job satisfaction. Computational outcomes for all homosexual coming out levels on average
utility are reported in Fig. 1.

Figure 1. Evolution of homosexual and undeclared workers average utility.

In this first experiment, the results show a negative impact on the undeclared workers utility (-19,47%), that is more than compesated by
the increase of homosexual workers utility (+30,16%). The aggregate benefit, that is the result of the sum of workers utility and the firm
profit, is quite stable with a bit decreasing (-6,62%). The explanation of this result is connected to reduction of the profit (-13,32%) for the
undeclared firms. A comparaison between undeclared and homosexual workers utility shows that the compesated effect is positive when
the number of homosexual workers increases.
In the second test, we calculated the percentage of job satisfaction for homosexual and undeclared workers for each level of homosexual
workers. Job satisfaction is defined by the equation (5). The simulation shows a higher effect on homosexual workers job satisfaction
compared to the effect on undeclared workers. There is a low decrease of undeclared workers satisfaction (-11,01%), and a large increasing
of homosexual workers satisfaction (+43,86%).
Table 2. Percentage of homosexual and undeclared satisfacted workers.

3%

5%

10%

15%

20%

25%

30%

Ho_satisf

14,71%

23,48%

20,94%

31,34%

30%

35,36%

33,78%

Und_satisf

92,02%

88,57%

86,42%

81,61%

82,59%

81,24%

81,88%

5.2 Test simulation with homosexual employers


In this test we proceeded, like in the previous one, with a progressive increasing of homosexual workers, but within firms managed by
homosexual employers. We observe an increasing of homosexual workers utility (29,59%), a decreasing of undeclared workers utility (16,43%) and a large increasing of firms profit (87,2%). The aggregate effect is positive.

Luigi Bonaventura

812

Int ernational Journal of Economy, Mana ge ment and Soci al Sci ences , 2(10) October 2013

Figure 2. Evolution of homosexual and undeclared workers average utility

The second test shows the percentage of undeclared and homosexual workers job satisfaction when the number of homosexual workers
increases. Table 3 shows a large increasing of percentage of homosexual workers satisfaction compared to a stable satisfaction of
undeclared workers.
Table 3. Percentage of homosexual and undeclared workers job satisfaction.

3%

10%

15%

20%

25%

30%

ho_satisf

19,71%

24,72%

32,08%

42,68%

41,64%

47,9%

und_satisf

84,15%

86,09%

87,33%

84,73%

85,75%

84,3%

Moreover, we calculated the average number of segregated jobs. A segregated job is a job that has the same sexual orientation workforce.
Figure 3 shows that the average number of segregated jobs decreases when the percentage of homosexual workers increases.

Figure 3. Average number of segregated jobs.

The Effects of Workers Sexual Orientation Disclosure in the Workplaces

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Internat ional Jour nal of Economy, Mana ge ment and Social Sciences , 2(10) October 2013

6.

Conclusion

Berggren and Elinder (2012) showed, in an econometric model, that tolerance toward homosexuals is negatively and quite robustly related
to economic growth. In a more detailed analysis we showed that it is not always true.
By means an agent-based model we simulate the effects of an increasing of sexual orientation disclosure in the workplaces. We test the
effects on workers utiliy, firms profit, job satisfaction and segregation. The results show a complessive improvement of the performances
and a better condition for undeclared and homosexual workers and employers. With a homosexual employer we can observe an increasing
of homosexual utility and firm profit, with a low decreasing of undeclared utility. Instead, with an undeclared employer the firms profit
decreases but the compesated effect of undeclared and homosexual workers utility is positive.
The effects on the workers satisfaction are always positive, in a firm managed by an undeclared employer like by a homosexual one. The
decreasing of undeclared workers satisfaction is more than compensated by the increasing of homosexual workers job satisfaction with
undeclared employer. In a firm managed by homosexual employer the job satisfaction has a positive increasing for homosexual and
undeclared workers.
The last test analyses the effects on the job segregation by an increasing of disclosure of sexual orientation. The effect is positive and
reduces the average number of segregated jobs.

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