All That Glitters Is Not Gold: The Impact of Certification Test Costs in Online Labor Markets
Authors: Bai, Jiaru; Gao, Qiang; Goes, Paulo; Lin, Mingfeng
Journal: Information Systems Research (2026)
<jats:p>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.</jats:p>