Learning to Discriminate on the Job

Using administrative records from a large national US retailer, we find managers learn to discriminate “on the job” as they gain experience hiring workers of different races. First, we find that negative and positive experiences with black hires seed the race of future hires, consistent with managers updating their beliefs about the productivity of worker groups. Second, experiences with black workers have a larger impact on future hiring than those with white workers, consistent with greater updating about their productivity. Third, early negative experiences with black workers yield particularly large and persistent declines in a manager’s subsequent black hiring, consistent with negative perceptions being slow to correct. Our results suggest that managers’ perceptions of worker groups evolve from their individual experiences in a way that systematically disadvantages minorities in the hiring process.