Do Digital Skill Certificates Help New Workers Enter the Market? Evidence from an Online Labour Platform

Abstract

We study the effects of a voluntary skill certification scheme in an online freelancing labour market. We show that obtaining skill certificates increases freelancers' earnings. This effect is not driven by increased freelancer productivity but by decreased employer uncertainty. The increase in freelancer earnings is mostly realised through an increase in the value of the projects won rather than an increase in the number of projects won. Moreover, we find evidence for negative selection to completing skill certificates, which suggests that the freelancers who complete more skill certificates are in a more disadvantaged position in the labour market.

Keywords: signaling, human capital, skill validation, skill certificates, micro-credentials, online freelancing, platforms, gig economy, computer-based assessment

JEL Classification: J210, J230, J240, J310, I200