All That Glitters Is Not Gold: The Impact of Certification Test Costs in Online Labor Markets

Our study examines how the value of skill certifications changes when an online labor platform eliminates testing fees. Although the policy led to a sharp increase in certification rates and faster hiring, it also reduced the signaling power of certifications. Employers became less likely to hire certified workers or offer them higher pay because their average performance declined. This drop in credibility disproportionately affected inexperienced workers who depended on certifications to establish trust. Importantly, we find that the negative effects of free certification can be reduced through better platform design. Showing more detailed certification information, such as test scores and how recently the certification was earned, helps employers interpret credentials more effectively. These design improvements can help preserve the value of certifications while expanding access.

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Institutions

Publication Details

Journal
Information Systems Research
Published
2025-05-27
DOI
https://doi.org/10.1287/isre.2023.0303
Citations
1
Primary Topic
Digital Economy and Work Transformation
Type
article
Field-Weighted Citation Impact
4.20
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article

All That Glitters Is Not Gold: The Impact of Certification Test Costs in Online Labor Markets

Qiang Gao, Jiaru Bai, Mingfeng Lin, Paulo Góes
1 citations
Information Systems Research
Digital Economy and Work Transformation
4.20
article

All That Glitters Is Not Gold: The Impact of Certification Test Costs in Online Labor Markets

Qiang Gao, Jiaru Bai, Mingfeng Lin, Paulo Góes
article en
1 citations

Abstract

Our study examines how the value of skill certifications changes when an online labor platform eliminates testing fees. Although the policy led to a sharp increase in certification rates and faster hiring, it also reduced the signaling power of certifications. Employers became less likely to hire certified workers or offer them higher pay because their average performance declined. This drop in credibility disproportionately affected inexperienced workers who depended on certifications to establish trust. Importantly, we find that the negative effects of free certification can be reduced through better platform design. Showing more detailed certification information, such as test scores and how recently the certification was earned, helps employers interpret credentials more effectively. These design improvements can help preserve the value of certifications while expanding access.

Information Systems Research
Tulane University (US), Georgia Institute of Technology (US), City University of New York (US), Stony Brook University (US)
Openalex Percentile: Top 8%
Digital Economy and Work Transformation
4.20
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