The Competitive Effects of Online Education

39 Pages Posted: 24 Oct 2016 Last revised: 28 Feb 2021

See all articles by David Deming

David Deming

Academic Dean, Harvard University - Harvard Kennedy School (HKS)

Michael Lovenheim

Cornell University - Department of Policy Analysis and Management; National Bureau of Economic Research (NBER)

Richard Patterson

Cornell University - Department of Policy Analysis and Management; United States Military Academy

Date Written: October 2016

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.

Suggested Citation

Deming, David and Lovenheim, Michael and Patterson, Richard and Patterson, Richard, The Competitive Effects of Online Education (October 2016). NBER Working Paper No. w22749, Available at SSRN: https://ssrn.com/abstract=2858059

David Deming (Contact Author)

Academic Dean, Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Michael Lovenheim

Cornell University - Department of Policy Analysis and Management ( email )

Ithaca, NY
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Richard Patterson

United States Military Academy ( email )

600 Thayer Rd
West Point, NY 10996
United States
(435) 640-9054 (Phone)

Cornell University - Department of Policy Analysis and Management ( email )

Ithaca, NY
United States
(435) 640-9054 (Phone)

HOME PAGE: http://https://sites.google.com/site/richpattersoncornell/

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