Returns to Investment in Distance Learning: the Case of Greece

In this paper we extend the literature on the rate of return to investment in Higher Education towards studies in distance learning Universities. In particular, we explore the difference in returns between graduates of a distance learning university (the Hellenic Open University - HOU) and applicants that were excluded by this university’s random selection process and did not study elsewhere. The data set was extracted from a database compiled from responses to a questionnaire which was part of a survey concerning HOU (the only Distance-learning University in Greece). A modified Mincer type model was estimated with fixed effects. Our findings suggest that graduates that have obtained a first degree from HOU enjoy a rate of return to education of about 8% higher than the rate of return obtained by those high school graduates that were not selected by this university. Moreover, Master’s degree graduates get about a 16.5% higher rate of return to education relatively to those applicants that were not selected for studies in HOU and did not study elsewhere. Additionally, our findings also show that the rates of return for higher education are high even after the 2008 economic crisis. These results suggest a straightforward policy implication: a distance learning University may not only be considered as a second chance to education for mature students, often facing time and budget restrictions, but, it may also be seen as a worthwhile private investment enabling a much higher private return. Moreover, from policymakers’ point of view, a distance learning university can be seen as a vehicle to reduce income inequalities and thus increase social mobility.