The evolution of public spending on higher education in a democracy

This paper analyses a political force that can cause an initial expansion of public spending on higher education and an ensuing decline in subsidies per student: the increase in the number, and thus voting power, of skilled parents. The rise of the skilled class leads to a majority for an initial expansion of public education spending. This expansion further boosts the number of skilled parents and, thus, future demand for higher education. The induced shift in demand implies that the initial subsidy per student becomes too expensive to be politically sustainable. The initial educational 'take-off' provokes a backlash at the polls. A majority now successfully calls for higher private contributions to the costs of university education. Nevertheless, overall enrolment continues to rise. But equality of opportunity, that went up in the expansion period, declines afterwards.

► This paper analyses the evolution of public spending on higher education. ► A rise in the number of skilled parents leads to a majority for public spending. ► Subsidies further increase the size of the skilled class and demand for education. ► The initial expansion of public spending provokes a backlash at the polls. ► A majority successfully calls for a lower subsidy per student over time.