Preference Signaling and Worker-Firm Matching: Evidence from Interview Auctions, by Laschever and Weinstein

 Here's a recent working paper from the IZA Institute of Labor Economics concerned with the importance of signals of interest in labor market matching:

Preference Signaling and Worker-Firm Matching: Evidence from Interview Auctions, by Ron A. Laschever and Russell Weinstein,  IZA DP No. 14622

Abstract: "We study whether there are improvements in worker-firm matching when employers and applicants can credibly signal their interest in a match. Using a detailed résumé dataset of more than 400 applicants from one university over five years, we analyze a matching process in which firms fill some of their interview slots by invitation and the remainder are filled by an auction. Consistent with the predictions of a signaling model, we find the auction is valuable for less desirable firms trying to hire high desirability applicants. Second, we find evidence that is consistent with the auction benefiting overlooked applicants. Candidates who are less likely to be invited for an interview (e.g., non-U.S. citizens) are hired after having the opportunity to interview through the auction. Among hires, these candidates are more represented among auction winners than invited interviewees, and this difference is more pronounced at more desirable firms. Finally, counterfactual analysis shows the auction increases the number and quality of hires for less desirable firms, and total hires in the market

...

"Auctions for interview slots may address two important frictions in the matching process: uncertainty over applicant quality, and uncertainty over the likelihood that an applicant accepts an offer. Even if employers can successfully identify desirable applicants, there remains the challenge of identifying which candidates are truly interested in the job and would accept an o↵er with high probability. In recent years the cost of job applications has fallen as more postings and applications are online. This

further raises the potential that applicants will have a low likelihood of accepting an offer.

...

"Though not common, there are a few markets in which all applicants have an equal opportunity to credibly signal their preferences for an employer. One example is the American Economic Association (AEA) job signaling mechanism, which allows candidates to send a signal of interest to two departments. Importantly, there is no requirement that employers interview the applicants sending the signal. In contrast, in our setting an employer is compelled to meet with some signaling job seekers.

"A second example, and the focus of this paper, is the auction system used in the market for professional master’s degree students, most commonly MBA students, at many top-ranked programs. These programs allow employers to choose some percentage of the applicants they interview, but require the remainder of the interview slots are allocated through an auction. Typically, firms first invite applicants for interviews, before applicants have had the opportunity to signal. Next, there is an auction for the remaining interview slots, and thus auction participants are students who were not invited for an interview by the firm. Each student is provided with an equal allotment of “bid points,” and the auction winners are guaranteed interviews

with the firm."