From taste-based to statistical discrimination

•Shows how taste-based discrimination can lead to later statistical discrimination.•First hiring manager’s taste for an ascriptive characteristic differs by gender.•For example, manager cares more about beauty for women than men.•Leads to hired men being more productive, on average, than hired women.•This provides basis for statistical discrimination by later hiring managers.

Consider hiring managers who care not just about productivity but also some other, unrelated characteristic. If they treat that ascriptive characteristic differently across groups by, for example, valuing beauty more for women than men, then the hired women will be better looking but less productive, on average. This taste-based discrimination, focused entirely on an ascriptive characteristic, can lead to productivity-based statistical discrimination by the firm’s subsequent hiring managers who observe from their workforce that women tend to produce less. This identifies a new channel behind statistical discrimination that arises from the behavior of prior hiring managers.