Abstract: Can a short-run taste-based discrimination shock have long-term consequences for economic growth? We study this question by considering Germans in the U.S. during World War I. Despite being an economically successful and integrated immigrant group, Germans became highly unpopular during the war years and were strongly discriminated against. Using county-level data and linked individual data from the Census in a difference-in-differences setting, we show that counties with higher World War I casualty rates saw an outflow of German-born workers to other counties. Casualties abroad acted as exogenous shifter of anti-German sentiment in the soldiers’ home counties. Counties that lost German-born workers in this way saw decreased post-war wages and productivity in the manufacturing sector, an industry in which Germans were overrepresented at the time. We provide evidence of how a temporary discrimination shock can have lasting economic consequences via internal displacement of workers with a particular skill set.