Micro-certification has been described by the EU Vocational Training Authority as a ‘megatrend’. The Australian Government’s National Microcredentials Framework states that “Technological change coupled with the rapid transformation brought about by Covid-19, has increased the potential for micro-credentials to rapidly upskill and re-skill the workforce”.

One of the first empirical studies of the impact of micro-certificates found that their impact was less transformative, more nuanced than the hype would suggest, but nonetheless a valuable ‘signal’ to an employer about the ability of a employed to do the work.

What are micro-certificates?

As the Australian Microloan Framework indicates, there is no accepted definition of the term and the microloan ecosystem is disparate, with no consistent definition across higher education, vocational education and industry. This largely reflects the fact that the concept of micro-certificates grew organically from the internet and continues to be driven primarily by private providers large and small. Microcredit courses range from a cybersecurity course offered by the UK’s Open University and Cisco to courses to become a dog walker.

The proposal for a European directive on micro-certifications defines it in the following terms:

“Micro-diploma refers to the recording of learning outcomes that a learner has acquired after a small amount of learning. These learning outcomes have been assessed against transparent and clearly defined standards. Courses leading to micro-degrees are designed to provide the learner with specific knowledge, skills and competencies that meet societal, personal, cultural or labor market needs. Micro-credentials belong to the learner, can be shared, and are portable. They can stand alone or be combined into larger credentials. They are backed up by quality assurance in line with agreed standards in the relevant industry or business area.

The Australian Microcredentials Framework defines micro-certificates as having a minimum learning period of one hour but less than the learning times of undergraduate diplomas and certificates.

Why microloans rather than TAFE?

Micro-degrees are considered to have a number of advantages over more formal, traditional ‘long-course’ professional training (including delivered in an online setting).

Any educational qualification helps to reduce employer uncertainty in a job market: employers face uncertainty about the abilities of applicants, especially applicants who are new to the job market and therefore lack references from previous employers. Formal University Qualifications or TAFE alleviate the need for an employer to invest in their own costly screening procedures to determine if someone is qualified for a job.

However, one problem is that the institutional education system may be slow to respond to rapidly changing skill demands in the labor market, especially with technological changes. Moreover, national formal qualifications may also be less effective in transnational and remote hiring situations which have increased during the pandemic.

From the perspective of workers, micro-certifications are said to “democratize” education. In particular, there are high hopes that micro-qualifications can help disadvantaged groups who remain excluded from formal education, despite measures to improve educational opportunities. As the proposed EU directive says:

“Micro-degrees can also be used as part of targeted measures to support inclusion and facilitate access to education, training and career opportunities for a wider range of learners. This broader range of learners includes disadvantaged and vulnerable groups (such as people with disabilities, older people, low-skilled/low-skilled people, minorities, people with migrant backgrounds, refugees and people with less education). opportunities due to their geographical location and/or their social situation). -economically disadvantaged situation). Micro-certificates can also be used in a targeted way to address challenges in education and training systems and labor markets, including gender and other discriminatory stereotypes (e.g. regarding study choices and practices and educational materials), to support smoother school-to-work transitions.

More broadly, micro-certification is seen as compatible with treating education as a lifelong human right. The EU considers that micro-degrees play a key role in achieving the 2030 target of 60% of all adults participating in training each year. The proposed EU directive describes micro-certification as “both lifelong and ‘life-wide’ and takes place in different contexts (at work, at home, among people who are already working and among those who are not currently working).’ The Australian Microcredentials Framework also identifies as one of the 5 defining principles of microcertification that it should support “lifelong learning [which] is increasingly important given the growing need for retraining and upskilling caused by industry disruption, but also given the dislocation and mental health issues that such disruption can cause.

It is a powerful program for microcertification. Does it deliver?

How was the empirical study conducted?

Researchers at the University of Oxford’s Internet Institute undertook a study of the effects of a voluntary micro-certification program on an online freelance job market, with the help of a leading online freelance platform. line (unnamed). The study used a random sample of 46,791 workers across 467,455 total projects.

The advantage of studying online freelancers is that the entire cycle of a freelance project takes place on the platform: the posting of the advertisement by the employer, the qualifications of the candidates, the interviews carried out by the employer of any preselected candidates, the qualifications of the successful candidate and finally the invoicing details of the work undertaken.

Many online freelancing platforms also offer freelancers the opportunity to take micro-certification skills tests, which are computer-based tests administered in the form of multiple-choice quizzes and scored automatically. On the platform studied, more than 300 different micro-certifications are available on skills such as programming languages, graphic design techniques and office software packages. The tests are very technical and ask candidates about very specific facts in their areas of expertise. Once a microloan test has been passed, the freelancer’s profile indicates that they are certified.

The researchers used a “fixed effects test” to essentially study the “before and after” impacts of the sample population undertaking an online microcredit test:

“In the design of the fixed-effects event study, we compare a worker’s labor market success during a short 14-day window before taking a microcredit test to labor market success during a 14-day window after testing. Assuming that the unobservables remain constant over the 28-day period, we can subsume them into event fixed effects (with a fixed effect for each time the worker completes a microcertificate).

Study results

The main conclusion of the study was:

‘..a micro-certificate increases workers’ income [but] this effect is not due to an increase in worker productivity, but to a decrease in employer uncertainty. Increased worker income is achieved by increasing the value of won projects rather than increasing the number of projects.

The financial benefits for the freelancer weren’t huge, but they were significant enough considering we’re talking about microloans. The study found that an additional microloan results in an average income gain of 8.9% over the following two weeks. This effect is mainly due to an increase in the value of the project, which increases by 9.7% after the completion of the microloans. Converted into dollars, this corresponds to a return of $30.15 per project upon graduation.

However, the study also revealed that the value of a microloan decreases as the freelancer already has experience – the increase in project value is up to 1.5 times greater for new entrants no work history on the platform than for average workers. Hence, the researchers’ view that microcredit was more important to the “signal” it was sending to the employer about a freelancer with more limited experience than the increased productivity that microcredit gives to the freelancer (because otherwise the fixed effect should be consistent across both inexperienced and experienced freelancers).

Perhaps most striking is the study’s finding that although the value of individual projects increased after micro-accreditation, the number of projects won was minimally impacted:

“We find that completing micro-certifications also leads to a 5.5% increase in the number of projects launched in the next 14 days, but this is a relatively small effect in practical terms; the point estimate implies that workers win a new project for approximately 63 micro-certifications completed.

This finding has obvious implications for the touted benefits of micro-certification in helping educationally disadvantaged groups enter the labor market. The researchers postulate that:

“This suggests that micro-certificates work as a partial substitute for verified prior work experience. However, the marginal effect of micro-diplomas on the number of projects initiated remains very low for new entrants. This can be explained by the fact that micro-credentials can attest to specialized skills, but still leave considerable uncertainty about candidates’ soft skills, such as communication, speed and reliability. References from previous employers seem to be more effective in giving an overall picture of candidates’ skills. Therefore, micro-certificates are not very effective in helping candidates with no professional background to win their first project. This limits the usefulness of microloans in reducing entry barriers for new workers.

The lesson seems to be that micro-certification is not an inexpensive way to “change the game” on educational and employment disadvantage and that there is no substitute for a system of professional training in person, adequately resourced and freely available.