Signaling in the Age of AI: Evidence from Cover Letters
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arXiv
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| Autori principali: | , , |
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| Natura: | Preprint |
| Pubblicazione: |
2025
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| _version_ | 1866908646815825920 |
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| author | Cui, Jingyi Dias, Gabriel Ye, Justin |
| author_facet | Cui, Jingyi Dias, Gabriel Ye, Justin |
| contents | We study the impact of generative AI on labor market signaling using the introduction of an AI-powered cover letter writing tool on a large online labor platform. Our data track both access to the tool and usage at the application level. Difference-in-differences estimates show that access to the tool increased textual alignment between cover letters and job posts and raised callback rates. Time spent editing AI-generated cover letter drafts is positively correlated with hiring success. After the tool's introduction, the correlation between cover letters' textual alignment and callbacks fell by 51%, consistent with what theory predicts if the AI technology reduces the signal content of cover letters. In response, employers shifted toward alternative signals, including workers' prior work histories. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2509_25054 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Signaling in the Age of AI: Evidence from Cover Letters Cui, Jingyi Dias, Gabriel Ye, Justin General Economics Economics We study the impact of generative AI on labor market signaling using the introduction of an AI-powered cover letter writing tool on a large online labor platform. Our data track both access to the tool and usage at the application level. Difference-in-differences estimates show that access to the tool increased textual alignment between cover letters and job posts and raised callback rates. Time spent editing AI-generated cover letter drafts is positively correlated with hiring success. After the tool's introduction, the correlation between cover letters' textual alignment and callbacks fell by 51%, consistent with what theory predicts if the AI technology reduces the signal content of cover letters. In response, employers shifted toward alternative signals, including workers' prior work histories. |
| title | Signaling in the Age of AI: Evidence from Cover Letters |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2509.25054 |