The Cost of Parenthood: Unraveling the Effects of Sexual Orientation and Gender on Income*

<jats:p><jats:bold>Objectives. </jats:bold> Prior research has repeatedly shown that parenthood affects employment outcomes; mothers have, on average, lower wages and are less likely to be hired than childless women. Some research indicates that this effect of parenthood on employment outcomes is dependent on sexual orientation. In particular, lesbian mothers might be treated more like childless women by those making employment decisions. This article examines the degree to which the lesbian wage advantage can be explained by lesbians avoiding the motherhood wage penalty experienced by heterosexual women.</jats:p><jats:p><jats:bold>Methods. </jats:bold> Drawing on 2000 U.S. Census data, this issue is first explored via ordinary least squares regression equations that estimate the effect of having a child present in the household on income. The Blinder‐Oaxaca method is then employed to decompose the earnings differential between heterosexual and gay individuals.</jats:p><jats:p><jats:bold>Results. </jats:bold> Results indicate that lesbians appear to experience a motherhood advantage that increases their wages by approximately 20 percent. Further, results support the notion that lesbians receive different returns to the presence of children in the household than do heterosexual women. Approximately 35 percent of the wage differential between lesbians and heterosexual women is attributable to differences in returns to child rearing.</jats:p><jats:p><jats:bold>Conclusion. </jats:bold> These findings have relevance for state and federal anti‐discrimination laws and work/family policies, as they provide further insight into the role that gender, and gender‐based assumptions, play in determining employment outcomes.</jats:p>