Signaling in the Age of AI: Evidence from Cover Letters
20 hours ago
- #AI
- #Signaling
- #Labor Market
- Study examines the impact of generative AI on labor market signaling using an AI-powered cover letter tool.
- Access to the tool increased textual alignment between cover letters and job posts, raising callback rates.
- Time spent editing AI-generated drafts positively correlated with hiring success.
- After tool introduction, correlation between cover letters' alignment and callbacks fell by 51%.
- Employers shifted toward alternative signals like prior work histories in response to reduced signal content.