Same-sex marriage law is good for US economy: UBS

Growth boost from same-sex marriage?

The U.S. economy will get a "substantial" boost from the legalization of same-sex marriage, due to improved labor mobility and increased productivity, UBS's chief economist told CNBC on Tuesday.

The U.S. Supreme Court ruled in June that same-sex couples had the right to marry, meaning that all states must now recognize and conduct gay marriages. Previously, states decided on an individual basis whether to do so, with some conservative states opting to ban them.

UBS Chief Economist Paul Donovan noted that the Supreme Court ruling would affect 6-7 percent of the U.S. population, meaning there was "bound to be some economic consequence."

People celebrate outside the Supreme Court after the decision regarding same-sex marriage, June 26, 2015.
Mladen Antonov | AFP | Getty Images

"Firstly it removes a barrier to labor mobility. This is very important. Previously, if you were married in New York you might not be able to move to another state where your marriage wasn't recognized," Donovan told CNBC on Tuesday.

"There is also a lot of evidence from corporates, that where you have a system that is prejudiced against certain people in society that group will under perform. Productivity is lower," he added.

Read MoreHow the business of same-sex weddings may change

Donovan said the new law could make a "not negilible" contribution to economic growth that could not yet be quantified.

"At this stage, we don't have the data. Give it a couple of years and we will be able to quantify this more substantially," he said.

"But frankly, add 0.2 percent to trend growth and over 25 years that becomes a really substantial contribution to economic well-being."

Read MoreRussia may ban George Soros charity

Twenty-one countries have now legalized same-sex marriage, Donovan said in a report earlier this month, noting that these places were "likely to receive an economic benefit from reduced prejudice."

When will the Fed raise rates?