Labor Market Signals: The Role of Large Language Models https://d.repec.org/n?u=RePEc:tiu:tiucen:a808b376-b6ae-4b5f-8a35-57fe320619eb&r=&r=ain
"… Access to LLMs improves the quality of cover letters by more than 0.2 standard deviations, as evaluated by recruiters
… effects are stronger for lower-quality applicants, thus reducing the dispersion in quality of the cover letters, hence reducing their value as a signal of the applicant’s true ability
… the LLM-induced improvements in the cover letter do not increase the job-seeker’s likelihood to get invited to an interview
… there is substantial heterogeneity: while the evaluation of low and medium-quality cover letters do not differ, recruiters evaluate high-quality cover letters written without #LLM assistance more highly and are more likely to invite the applicant to the next stage of the recruitment process.
… LLM usage consistently reduces overall welfare by distorting labor market #matching: lower-ability applicants appear more skilled than they are, placing them in roles demanding higher qualifications, while genuinely high-quality applicants become mismatched into positions for which they are overqualified"
#LaborMarkets #AI #Signaling