Abstract

Universities across the U.S. are aggressively expanding into online education to broaden access and sustain enrollment. In this study, we examine one consequence of this expansion that has become increasingly prevalent yet received limited scholarly attention: the spillover effects of launching online IT master’s programs on the employment outcomes of existing undergraduate graduates. We investigate this question by exploiting a natural experiment: the staggered adoption of online IT master’s programs across U.S. universities from 2005 to 2023. Using propensity score matching and staggered difference-in-differences, we analyze a linked dataset of approximately 1.4 million undergraduate graduates from U.S. universities, combining individual-level LinkedIn employment records with institutional data from IPEDS. Preliminary findings suggest that online program launches significantly reduce undergraduate employment rates in the short run, consistent with reputation dilution and credential crowding as the primary mechanisms. However, these negative effects attenuate over longer time horizons, with little persistent harm observed for graduates from institutions where online programs mature and gain employer acceptance. Further, results suggest that online expansion strengthens long-run institutional visibility, indicating that online programs may ultimately broaden access while strengthening institutional reputation and graduate employment prospects over time. At the same time, results also indicate that online expansion risks imposing near-term reputational externalities on existing offline graduates, making traditionally credentialed undergraduates comparatively less distinctive in the labor market. These findings offer insights for universities, accreditors, and policymakers evaluating the true costs and benefits of online education expansion.

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