Political parties and higher education spending

Abstract

A nation's endowment with human capital is an important source of economic prosperity, yet education systems as well as the amount of public spending differ both between and within industrialised countries. Traditional approaches in comparative political economy explain education spending from a perspective in which leftist parties favour human capital formation. In contrast, recent approaches claim that – with regard to public financing of higher education in stratified education systems – the basic assumptions of partisan theory rather lead to the opposite hypothesis. In such systems, a pattern of reverse redistribution emerges, under which electoral incentives let right-wing parties favour increases in higher education budgets. This article tests both claims within the decentralised German education system. Its encompassing empirical strategy provides clear support for the latter hypothesis in the 16 German states between 1992 and 2003. The results imply that the partisan composition of government and preferences for redistribution continue to matter.