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The Effects of Widespread Online Education on Market Structure and Enrollment
We study the rapid expansion of Brazil‘s private online higher-education sector and its effects on market structure and college enrollment. Exploiting regional and field-specific variation in online education penetration, we find that online programs expand access for older students but divert younger students from higher-quality in-person programs. Greater competition lowers tuition prices but also reduces the supply of in-person degrees. Using an equilibrium model of college education, we show that in the absence of online programs, total enrollment would be 14 percent lower, while in-person enrollment would rise by 33 percent. On net, aggregate labor-market value added declines by 1.4 percent. Online education raises value added for older students, who benefit from increased access, but lowers it for younger students, who shift toward lower-return online options. Counterfactual policies that restrict online enrollment to older cohorts could increase value added for younger students without reducing gains for older cohorts.
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