Working Paper: NBER ID: w22749
Authors: David J. Deming; Michael Lovenheim; Richard W. Patterson
Abstract: We study the impact of online degree programs on the market for U.S. higher education. Online degree programs increase the competitiveness of local education markets by providing additional options in areas that previously only had a small number of brick-and-mortar schools. We show that local postsecondary institutions in less competitive markets experienced relative enrollment declines following a regulatory change in 2006 that increased the market entry and enrollment of online institutions. Impacts on enrollment were concentrated among private non-selective institutions, which are likely to be the closest competitors to online degree programs. We also find increases in per-student instructional spending among public institutions. Our results suggest that by increasing competitive pressure on local schools, online education can be an important driver of innovation and productivity in U.S. higher education.
Keywords: Online Education; Higher Education; Market Competition; Enrollment; Instructional Spending
JEL Codes: I22; I23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| online degree programs (A23) | competitiveness of local education markets (I21) |
| competitiveness of local education markets (I21) | enrollment at local postsecondary institutions (I23) |
| competitiveness of local education markets (I21) | enrollment at private nonselective institutions (I23) |
| competitiveness of local education markets (I21) | per-student instructional spending (H52) |
| online competition (L13) | average tuition prices in private four-year institutions (I23) |
| online competition (L13) | instructional spending in traditional institutions (I23) |