Dennis Alexis Valin Dittrich<p>Labor Market Signals: The Role of Large Language Models <a href="https://d.repec.org/n?u=RePEc:tiu:tiucen:a808b376-b6ae-4b5f-8a35-57fe320619eb&r=&r=ain" rel="nofollow noopener" translate="no" target="_blank"><span class="invisible">https://</span><span class="ellipsis">d.repec.org/n?u=RePEc:tiu:tiuc</span><span class="invisible">en:a808b376-b6ae-4b5f-8a35-57fe320619eb&r=&r=ain</span></a><br>"… Access to LLMs improves the quality of cover letters by more than 0.2 standard deviations, as evaluated by recruiters<br>… 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<br>… the LLM-induced improvements in the cover letter do not increase the job-seeker’s likelihood to get invited to an interview <br>… 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 <a href="https://fediscience.org/tags/LLM" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>LLM</span></a> assistance more highly and are more likely to invite the applicant to the next stage of the recruitment process.<br>… LLM usage consistently reduces overall welfare by distorting labor market <a href="https://fediscience.org/tags/matching" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>matching</span></a>: 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"<br><a href="https://fediscience.org/tags/LaborMarkets" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>LaborMarkets</span></a> <a href="https://fediscience.org/tags/AI" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>AI</span></a> <a href="https://fediscience.org/tags/Signaling" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>Signaling</span></a></p>