The US Supreme Court ruled in June that gay marriage is legal nationwide.
No doubt, such an historic verdict will have economic repercussions.
But even though this ruling was specifically about marriage, the benefits go beyond just the wedding (and divorce) planning industries.
The main economic benefit from the legalization of same-sex marriage “is the potential for an increase in labour productivity,” writes UBS economist Paul Donovan. “This productivity boost comes from greater labour mobility and from maximizing labour potential.”
More concretely, legalizing same-sex marriage helps to promote trend growth in the following three ways, according to Donovan:
- It removes the limits on labour mobility that come with states not recognising gay marriage. If someone’s marriage is not recognised in a certain state, then that person’s desire to move to that state is weakened by the prospect of economic and legal disadvantages.
- It helps to overcome the problem of “irrational” social discrimination — specifically at work. Since marriage is as much a social thing as it is a legal institution, denying this social rite-of-passage to one group suggests that that group is somehow socially inferior. In the workplace, this nurtures “irrational discrimination,” according to Donovan.
- It helps overcome the problem of economic underperformance resulting from the mental strain of being an inferior group. Donovan writes that there’s strong evidence that creating an “inferior class” negatively impacts the economic performance of that group.
“At least part of the growth of income inequality in recent years has been about the higher rewards to higher skills — the market place more value on maximizing skills than in the past,” writes Donovan. “This is why any form of prejudice is bad economics. Irrationally discriminating against a section of society will deny an economy the full value of that group’s skill set.”
“Legalizing same-sex marriage is a means of reducing prejudice and through so doing should help to raise productivity in an economy,” concludes Donovan.
As an end footnote, it’s worth adding that these points don’t apply to just the LGBT community — but to every discriminated group of people.