The political economy of higher education finance

THE

OF HIGHER
EDUCATION
FINANCE
THE POLITICS OF TUITION FEES AND SUBSIDIES
IN OECD COUNTRIES, 1945-2015

JULIAN L. GARRITZMANN


The Political Economy of Higher
Education Finance



Julian L. Garritzmann

The Political
Economy of Higher
Education Finance
The Politics of Tuition Fees and Subsidies in
OECD Countries, 1945–2015


Julian L. Garritzmann
University of Konstanz
Department of Politics & Public Administration
Konstanz, Germany

ISBN 978-3-319-29912-9

ISBN 978-3-319-29913-6
DOI 10.1007/978-3-319-29913-6

(eBook)

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To my parents, for all the love and support—and for all the opportunities.



ACKNOWLEDGMENTS

Many people have helped me to start and finish this book. First and foremost, I am deeply indebted to Marius Busemeyer. Since we met at the Max
Planck Institute in Cologne, Marius has supported me in many respects:
he awakened my interest in education policy and the welfare state; he commented on numerous versions of my papers; and he offered me convenient
research positions with long time horizons (very unusual nowadays) and
generous funding (even more unusual), meaning that throughout my
time as a graduate student I had the means to attend conferences and
workshops and was able to afford a research stay at Harvard University.
Moreover, Marius created a highly productive work environment at the
University of Konstanz; he kept my teaching load low and hardly ever
bothered me with organizational matters so that I could focus on my own
research. Maybe most importantly, Marius always pushed me further with
critical comments and tough deadlines, but also left me a lot of academic
freedom and accepted that I often had to find my own way, sometimes
disregarding good advice (of course, often regretting this later). In short,
Marius was the ideal supervisor and, moreover, has become a good friend.
Christian Breunig has been the perfect second supervisor: always available when I needed advice, but never trying to push me in a direction in
which I didn’t want to head; always very clear in his critique and concentrating on the big, critical questions. Christian not only provided substantive advice but also pushed me to bring this book into a (hopefully) more
easily accessible and shorter format, dropping many of the potentially
interesting, but largely unnecessary, meanderings of the book.

vii


viii

ACKNOWLEDGMENTS

I am also enormously thankful to Torben Iversen. I met Torben during
two workshops in Bremen and Konstanz and was very impressed by his
analytical precision and style of thinking about politics. Right from the

start he took a lot of time to have discussions with me and never treated
me as the little graduate student that I was. I am very grateful that Torben
invited me to Harvard, where he paved my way, connecting me to other
exciting scholars. Moreover, Torben agreed to serve as a supervisor for my
dissertation and took the time to comment extensively on single papers
and on the final manuscript. His view on my work—though I did not
always follow it—has helped me to sharpen my analytical focus and simplify the argument as much as possible.
Finally, I thank Dirk Leuffen, who agreed—on short notice—to chair
my dissertation defense committee, and I am grateful that he not only
took the time to read through my lengthy dissertation but also to comment on it from an “outside angle,” which helped me to focus more on
the main story.
Moreover, I wish to thank our entire team at the University of Konstanz:
Aurélien Abrassart, Yvonne Aymar, Margot Beier, Michael Dobbins,
Ulrich Glassmann, Susanne Haastert, Susanne Münn, Erik Neimanns,
Roula Nezi, Raphaela Schlicht-Schmälzle, and Janis Vossiek. I have always
enjoyed the critical but constructive discussions in our group. I am also
grateful for all of the support from our student assistants who saved me
a great deal of time by doing a lot of—sometimes annoying, but necessary—work: Dana Behrens, Sophie Fendrich, Maximilian Gahntz, Caspar
Kolster, Tobias Tober, Léonie Trick, Marie Zeller, and, most of all, Lina
Seitzl, who has been a great support during almost my entire time at the
University of Konstanz. I also wish to thank Kilian Seng, Peter Selb, and
Susumu Shikano for their statistical advice.
During my time as a Visiting Fellow at Harvard, I experienced an enormously inspiring, creative, and energizing environment. Besides Torben
Iversen, a number of colleagues commented on my work and stimulated
my thinking in various ways: Daniel Ziblatt, Dan Smith, and Gwyneth
McClendon let me participate in and present at the Research Workshop
in Comparative Politics, and had helpful comments. Moreover, I am very
thankful to Peter Hall and Kathy Thelen, who took time to discuss my
ideas with me. Furthermore, Jon Fiva, Jeff Frieden, Daniel Koss, John
Marshall, Arthur Spirling, and Carina Schmitt commented on several

papers. Finally, many thanks to Dominik Geering and Olaf van Vliet.
During our joint lunches almost every day I not only received a lot of


ACKNOWLEDGMENTS

ix

feedback, but also made two great friends that I unfortunately see much
too seldom.
At the University of Cologne, where I graduated in 2011, I particularly
wish to thank André Kaiser, who got me interested in comparative politics in general and in parties and party competition in particular. During
my time as a student assistant at his chair, he fundamentally shaped my
perspective on political science and inspired me to think about the importance of time in this field. I appreciate that I always find the door open
(and often a free desk at which I can do some work) when I come “back
home.”
Moreover, many people have commented on parts of the book at various stages: Sakari Ahola, Ben Ansell, Michael Braun, Margarita Gelepithis,
Silja Häusermann, Anne-Marie Jeannet, Carsten Jensen, Jens Jungblut,
Olli Kangas, Peter Maassen, Paul Marx, Traute Meyer, Stefan Thewissen,
Pieter Vanhuysse, Wim van Oorschot, Peter Selb, Daniel Stegmüller,
Christine Trampusch, Martina Vukasovic, and Claus Wendt. Colleagues
have also commented on the paper at various occasions such as at the
CES Conferences in Amsterdam and Paris; the APSA Annual Meeting in
Washington; the MPSA Conference in Chicago; the ESPAnet Meetings
in Mannheim, Odense, and Oslo; Harvard’s various research workshops;
the ECPR General Conference in Montréal; the HEIK seminar at the
University of Oslo; the Cologne Center for Comparative Politics; and
various occasions at the University of Konstanz. Still, I’m pretty certain I
have forgotten to mention someone, so I’m certain I owe drinks to some
unmentioned but well-deserving friends, here’s a place where you can fill

in your name while patting yourself on the back: _____________________
(the next beer is on me!).
Furthermore, I appreciate the generous funding I have received from
several bodies, particularly from the German Research Foundation’s
Emmy Noether Programme, the University of Konstanz’s Graduate
School of Decision Sciences, and the German Excellence Initiative, which
helped finance my stay at Harvard University.
Finally, those who know me at least a little, know that I’m a big fan of
Aristotle and Hannah Arendt. And those who know Aristotle or Hannah
Arendt a little, know about the importance of friendship to connect science
with life, philosophy with political science, and society with one’s personal
eudaimonía. Thus, a big shout out goes to all of my friends around the
world who have helped me not to think about my work. To name but a
few (and again I probably have to buy some drinks), Jan Sahm has always


x

ACKNOWLEDGMENTS

been a true friend (in the Aristotelian sense)—always up for doing foolish
things and for talking nonsense for hours, probably the most important
thing one can do in today’s “knowledge economy”; moreover, I have had
great scientific conversations with Leonce Röth, who always tries to challenge everything I say—but (therefore!?) at the same time has been a great
friend over the years. In addition, Moritz Bassler, Matthias Klöpfer, Kilian
Seng, and Jens Winkler were not only excellent musicians to play jazz with
but also became close friends in Konstanz. Robi Chattopadhyay proved,
among other things, that there are fewer people who know how to listen
to good music than how to play it. And during the many hours of practice
and trips to away games across Germany, my floorball team made sure I

physically did not have the breath to concentrate on any scholarly work.
Thanks, everyone!
Last, but actually first, luck had it that I met Susanne B. Haastert during the stressful wrap-up phase of finishing my dissertation. I am extremely
happy and grateful that ever since I have had such a smart and critical colleague, understanding friend, and loving partner at my side!
Julian L. Garritzmann
Konstanz, December 2015


CONTENTS

1

2

3

4

5

6

The Politics of Higher Education Tuition Fees and 
Subsidies

1

The Four Worlds of Student Finance: A Comparative
Descriptive Overview of Tuition Fees and Subsidies in 
33 OECD Countries

57

Adding “Some Flesh to the Bones”: Illustrative Case
Studies of Four Diverse Cases Over Seven Decades

99

What Do Parties Want? Parties’ Positions and Issue
Emphasis on Tuition Fees and Subsidies

209

Testing the Time-Sensitive Partisan Theory in Large-n
Analyses: Parties’ Impact on the Tuition-Subsidy
Regimes of 21 Democracies Over Time

237

Individual-Level Attitudes Towards Subsidies: How
Positive Feedback-Effects Prevent (Radical) Change
in the Four Worlds of Student Finance

267

xi


xii

CONTENTS

7

Conclusion and Outlook

Index

301
315


LIST

Fig. 1.1
Fig. 1.2
Fig. 1.3
Fig. 2.1
Fig. 2.2
Fig. 2.3
Fig. 2.4
Fig. 2.5

Fig. 2.6
Fig. 2.7
Fig. 2.8
Fig. 2.9
Fig. 2.10
Fig. 2.11
Fig. 3.1

Fig. 3.2
Fig. 3.3

OF

FIGURES

The Four Worlds of Student Finance
Schematic depiction of the different paths of the origins
of the Four Worlds of Student Finance
Schematic summary of the feedback-argument
Proportion of students paying tuition fees in 1997 and 2010
Average tuition fees in public type-A higher education
institutions, 2003–2009
Household expenditure on higher education institutions,
by country (1995–2010)
Public subsidy spending as a share of total public tertiary
education spending and as a share of GDP, 2008
Public subsidy spending in low-subsidy (upper panel) and
high-subsidy (lower panel) regimes, by country
(1995–2010)
Share of students receiving subsidies and level of public
expenditure on subsidies (2008)
Proportion of students receiving different kinds of subsidies
The Four Worlds of Student Finance
Cluster analysis including a parsimonious selection of
variables (dendrogram)
Cluster analysis including all relevant variables (dendrogram)
Cluster analysis including only significantly discriminating
variables (dendrogram)

Left parties’ cabinet seat shares in Finland (1945–2010)
Finnish students’ incomes by type of revenue (1964–1994)
Enrollment levels in Germany, Japan, and the USA
(1850–1992)

3
27
34
61
65
67
70

71
75
76
78
83
85
86
107
112
118
xiii


xiv

LIST OF FIGURES

Fig. 3.4
Fig. 3.5
Fig. 3.6
Fig. 3.7
Fig. 3.8
Fig. 3.9
Fig. 4.1
Fig. 4.2
Fig. 4.3
Fig. 4.4
Fig. 4.5
Fig. 4.6
Fig. 5.1
Fig. 5.2

Fig. 5.3
Fig. 5.4
Fig. 5.5
Fig. 5.6
Fig. 6.1
Fig. 6.2

Higher education enrollment levels in Japan (1970–2010)
Proportion of all students receiving BAföG (1972–2012)
Different kinds of subsidies received depending on parental
background (1970–1990)
Number of Pell Grant recipients and level of expenditure
on Pell Grants (1973–2004)
US respondents’ attitudes on the nation’s current level of
education spending (1973–2006)

Tuition as a share of public and private HEIs’ total revenues
(1940–2000)
Parties’ positions and issue emphasis on higher education
finance across 14 democracies in 2008
Parties’ positions on higher education finance by
party family
Liberal parties’ positions on higher education finance
Parties’ issue emphasis on higher education finance by
party family
Mainstream versus other parties’ positions and emphasis
on higher education finance
Summary of the findings on mainstream parties’
positions and emphasis on higher education policies
Current public subsidy spending over left-wing parties’
cabinet seat shares (1945–1965)
Countries’ current private household higher education
spending over conservative and non-Christian center
parties’ cabinet seat shares (1945–1965)
Current public subsidy spending over left-wing parties’
cabinet seat shares (1966–1985)
Current public subsidy spending over left-wing parties’
cabinet seat shares (1986–2005)
Current private household higher education spending
over right-wing parties’ cabinet seat shares (1966–1985)
Current private household higher education spending
over right-wing parties’ cabinet seat shares (1986–2005)
Attitudes towards subsidies over time
Attitudes towards subsidies by country

124

149
153
176
179
180
214
216
218
225
226
232
240

241
242
243
244
245
280
281


LIST

Table 2.1
Table 2.2
Table 2.3
Table 2.4
Table 3.1

Table 3.2
Table 4.1

Table 4.2
Table 4.3
Table 4.4
Table 5.1
Table 5.2
Table 5.3

OF

TABLES

Characteristics of tuition systems in 33 OECD countries
over time
Proportion of public subsidy expenditure spent on grants,
by country (1997–2008)
Overview of variables included in the cluster analyses
ANOVA results and cluster centroids for the
“significant only” model
Tuition fees in Japanese private higher education
institutions compared with the consumer price
index (1960 = 100)
Overview of US governing majorities and major
higher education reforms (1933–2014)
Parties’ positions between fully publicly funded (1) and
fully privately funded (7) higher education, averaged
by country
Positive feedback-effects alter parties’ preferences in

Model 1 and 2
Feedback-effects of the tuition-subsidy regimes on
parties’ higher education finance preference
Parties’ issue emphasis on various policy areas
Regressing current private household spending on
aggregated cabinet seat shares, OLS
Regressing current public subsidy spending on aggregated
cabinet seat shares, OLS
Effects of government composition on tuition fees in
21 democracies between 1995 and 2010: TSCS,
country-year data

62
73
81
87

125
166

215
221
222
223
246
247

254
xv

xvi

LIST OF TABLES

Table 5.4

Table 5.5

Table 5.6

Table 5.A
Table 6.1
Table 6.2
Table 6.3

Table 6.A

Effects of government composition on subsidies in
21 democracies between 1995 and 2010: TSCS,
country-year data
Effects of government composition on tuition fees in 21
democracies between 1995 and 2010: TSCS regressions,
government term data
Effects of government composition on subsidies in
21 democracies between 1995 and 2010: TSCS regressions,
government term data
Descriptive statistics for country-year macro data (Chap. 5)
Micro-level determinants of respondents’ attitudes towards
subsidies: multi-level ordered logit models, odds ratios

Marginal effects to be “definitely” in favor of subsidies
(based on Model 3a)
Micro- and macro-level determinants of respondents’
attitudes towards subsidies from the “keep significant only”
model (Model 3, Table 6.1): multi-level ordered logit models,
odds ratios
Correlations of dependent and independent variables and
descriptive overview

256

259

260
263
282
286

287
293


CHAPTER 1

The Politics of Higher Education Tuition
Fees and Subsidies

1.1

INTRODUCTION

When a student graduates from college in the USA, she probably shoulders a debt of US$40,000, due to loans she took out to cover tuition fees
and living expenses. Even debts exceeding US$100,000 are not uncommon. Suppose this student (let’s call her Hannah) studied in Finland
instead. There, Hannah would pay no tuition fees, and she would receive
a substantial governmental grant to cover living costs during her studies.
We can also imagine Hannah studied in Germany, where no tuition fees
would be charged either; presumably, however, she also would not receive
any financial student aid. Finally, consider that Hannah attended a typical
Japanese university where the tuition amounts would resemble those of
the USA; in contrast to the USA, however, public grants and subsidized
loans would be hardly available.
Why do students in some countries pay tremendously high tuition fees
while students in other countries study free of charge? Why do some countries offer grants, scholarships, and subsidized loans while such subsidies
are non-existent elsewhere? What are the (re-)distributional consequences
of these different tuition-subsidy systems? This book provides answers to
these and related questions by analyzing the political economy of higher
education tuition fees and subsidies.1
More specifically, this book poses and answers three research questions
that build on one another. Firstly, how do the tuition-subsidy systems differ
across the advanced democracies? As a systematic comparative descriptive
© The Author(s) 2016
J.L. Garritzmann, The Political Economy of Higher Education
Finance, DOI 10.1007/978-3-319-29913-6_1

1


2

J.L. GARRITZMANN

overview on the variety of tuition-subsidy regimes across the advanced
democracies is still absent in the literature, I compiled a huge comparative dataset on the tuition-subsidy systems in 33 advanced democracies
(OECD countries, i.e. the Organisation for Economic Co-operation and
Development) to provide such an overview. Chapter 2 summarizes these
data, which comprise information on more than 70 characteristics of the
respective tuition-subsidy systems. The main takeaway from the descriptive overview is that the advanced democracies fall into Four Worlds of
Student Finance. In some countries (mainly continental Europe) tuition
fees are low, but financial student aid is also largely non-existent: the lowtuition–low-subsidy regime. A second group (comprising Nordic Europe)
is characterized by the absence of tuition fees but very generous public
subsidies: the low-tuition–high-subsidy regime. The Anglo-Saxon countries form a third group, the high-tuition–high-subsidy regime, where
most students are charged considerable tuition amounts but also often
receive public grants or publicly subsidized student loans. Finally, we also
find the—prima facie potentially most surprising—combination of high
tuition fees accompanied by sparse public subsidies in Japan, Korea, and
other Asian countries, as well as some Latin American countries: the hightuition–low-subsidy regime. Figure 1.1 depicts the Four Worlds of Student
Finance with two exemplary variables (cf. Chap. 2 for details).
The second—and major—aim of this book is to explain the variety of
the Four Worlds of Student Finance. Why do countries’ higher education
finance systems differ so considerably? This question is particularly puzzling,
because when one goes back to the immediate post-World War II (WWII)
period, all of these countries’ tuition-subsidy systems looked very much
alike2: systematic public subsidies were non-existent in all countries and
tuition was comparably low (Chap. 3; cf. also Eicher 1998; Nakata and
Mosk 1987). Moreover, enrollment levels were also very low, as barely
5 % of each age cohort enrolled in higher education (Trow 1972; Windolf
1997). In other words, the higher education systems of countries such
as Germany, Sweden, the UK, the USA, Japan, or France were all highly
similar in the mid-twentieth century. The main question of this book,
therefore, is how can we explain the origin of the Four Worlds of Student

Finance? How and why have countries developed from a low-tuition–lowsubsidy regime in the immediate post-WWII decade to today’s four highly
distinct regimes?
The main argument of this book is—challenging a literature that so far
has almost exclusively focused on structural socio-economic explanations


THE POLITICS OF HIGHER EDUCATION TUITION FEES AND SUBSIDIES

3

Fig. 1.1 The Four Worlds of Student Finance (Source: Author’s compilation, cf.
Fig. 2.8 for details)

(see Sect. 1.2)—that the main reason for countries’ diverse developments lies
in politics. More specifically, I use partisan hypothesis (Hibbs 1977; Alt
1985; Tufte 1978) as the starting point, arguing that the partisan composition of government is crucial for the development of the advanced
democracies’ tuition-subsidy regimes. Yet, as I will demonstrate, partisan
theory alone cannot explain the full variety of the Four Worlds of Student
Finance, rather only two of the four regimes: the constant predominance
of conservative parties can explain the high-tuition–low-subsidy regime
(e.g., Japan), while the stable predominance of left-wing parties explains
the low-tuition–high-subsidy cluster (e.g., Sweden). Yet, in order to understand the origin of the other two regimes (low-tuition–low-subsidy as, for
example, in Germany, and high-tuition–high-subsidy as, for example, in
the USA), we need to go beyond partisan hypothesis in its “simple” form.
Drawing on key contributions in the recent historical institutionalist
literature (see Pierson 1993, 2004), I extend simple partisan hypothesis
by arguing that we need to take time and timing seriously, particularly the


4

J.L. GARRITZMANN

sequencing and duration of parties in office. I develop a Time-Sensitive
Partisan Theory and claim that only a “time-sensitive” analysis of the partisan composition of government can explain why countries’ tuition-subsidy systems have developed from a highly similar starting point in the mid-twentieth
century to today’s Four Worlds of Student Finance. Section  1.3 develops
the argument more fully and derives several empirically testable implications that the empirical chapters of this book (Chaps. 3, 4, 5, and 6) then
engage in testing, combining a broad variety of quantitative and qualitative analyses in a multi-method approach (Lieberman 2005; Rohlfing
2008). The main theoretical contribution of the book is thus the refinement of a major theory of comparative politics that can also be applied to
other policy areas (as outlined in Chap. 7).
The third and final question this book seeks to answer arises from the
fact that during roughly the last 20  years, hardly any country has witnessed radical policy change. That is, no country changed from one
tuition-subsidy regime to another.3 In fact, it seems to be the case that the
advanced democracies’ tuition-subsidy systems were largely formed during the first four post-war decades, while any subsequent developments
have mainly continued along countries’ respective regime paths: tuition
kept increasing in high-tuition countries, while low-tuition countries have
remained tuition-free; likewise, high-subsidy countries have kept subsidies
at a high level or extended these even further, while low-subsidy countries
have hardly made attempts to install any serious public financial support
(cf. Chap. 2 for empirical data). Thus, the question arises, why is it the case
that countries do not change their tuition-subsidy systems anymore? Why are
the Four Worlds of Student Finance so immune to radical policy change?
The argument I bring forward to explain this empirical puzzle is
grounded in recent work on “positive feedback-effects” and “path dependencies” (see Pierson 1993, 2000a, 2004; Campbell 2012; Kumlin and
Stadelmann-Steffen 2014). In Sect.  1.3, I claim theoretically—and demonstrate empirically in Chap. 6—that radical policy change has become
increasingly difficult for parties, because the existing tuition-subsidy systems
generate their own support by shaping people’s attitudes, bringing them in
line with the status quo via positive feedback-effects: people support those
characteristics of the higher education systems that they themselves have
experienced. Consequently, radical change from the respective regime

paths becomes increasingly electorally costly for political parties, thereby
limiting governments’ leeway in departing from the respective regime
paths.


THE POLITICS OF HIGHER EDUCATION TUITION FEES AND SUBSIDIES

5

In less abstract terms, I argue that individuals who have (not) paid
tuition fees for their own education will also expect others (not) to pay for
their own education, thereby reinforcing the high-tuition (low-tuition)
path. Similarly, individuals who have (not) received generous subsidies will
support that other students also (do not) receive these benefits, thereby
strengthening the high-subsidy (low-subsidy) path. I show in Sect. 1.3 that
this follows from both a rational choice perspective and from sociological
approaches. Taken together, I argue that positive feedback-effects become
stronger over time as the group affected by higher education increases and
as the topic increasingly gains political salience. This sets high incentives
for governments to follow further along the embarked upon paths because
departure from the respective tuition-subsidy paths becomes electorally
more costly. Consequently, the Four Worlds of Student Finance are solidified over time.4
Empirically, the book tests this Time-Sensitive Partisan Theory in a
multi-method design. Chapter 3 begins by analyzing the developments
in four qualitative country case studies over the seven post-war decades,
applying systematic process analysis (Hall 2003, 2008). Finland, Japan,
Germany, and the USA were selected for in-depth study as “diverse cases”
(Seawright and Gerring 2008), i.e., they represent the full variation of the
Four Worlds of Student Finance. Analyses of the origins of the tuitionsubsidy systems in these four countries demonstrate that not only the
partisan composition of government but particularly the sequence and

duration of parties in office play a crucial role in the development of
countries’ tuition-subsidy systems, revealing strong support for the TimeSensitive Partisan Theory.
Chapters 4, 5, and 6 continue the analyses in a quantitative large-n setting. Chapter 4 provides the empirical groundwork by studying parties’
positions on higher education finance in order to test whether parties hold
distinct positions on higher education finance in the first place, whether
these vary along ideological lines, and whether parties alter their positions
over time due to positive feedback-effects. The analyses utilize data from
a recent expert survey on party positions (Rohrschneider and Whitefield
2012) and my own codings of all manifestos of the British parties over
four decades. The findings offer strong support for the Time-Sensitive
Partisan Theory and provide the starting point for Chap. 5, which applies
cross-sectional and time-series–cross-sectional (TSCS) regressions to all
publicly available data on tuition-subsidy systems, testing whether the
Time-Sensitive Partisan Theory also holds in a large-n setting over time.


6

J.L. GARRITZMANN

The quantitative results underpin the qualitative findings and put them
on a broader basis by demonstrating that the partisan composition, and
particularly the sequencing and duration of parties in office can explain the
Four Worlds of Student Finance.
The final empirical chapter (Chap. 6) applies multi-level regressions to
public opinion survey data for 21 countries over two decades to probe the
arguments about positive feedback-effects, i.e., that the existing tuitionsubsidy regimes feed back on individual preferences, making the systems
increasingly immune to radical policy change. Again, the empirical data
are supportive, showing that voters of left-wing and right-wing parties
hold different preferences on higher education policies and that positive

feedback-effects seem to be at work, as respondents in countries with
generous (expanding) subsidy systems are more supportive of expanding
these subsidies even further.
In summary, by bringing together arguments from party politics, welfare state analysis, political economy, and public opinion research, routed
in a meta-theoretical combination of rational choice and historical institutionalism, and by testing these arguments in a multi-method design
drawing on a large variety of empirical material, this book offers an explanation of the political economy of tuition fees and subsidies. The remainder of this chapter discusses the existing literature (Sect.  1.2), introduces
my Time-Sensitive Partisan Theory in greater length (Sect. 1.3), sketches
some important socio-economic consequences of the tuition-subsidy systems to underpin the socio-economic and political relevance of tuition fees
and subsidies (Sect. 1.4), and presents an outline of the book (Sect. 1.5).
It should be emphasized that while I believe it makes sense to read the
chapters in the order of presentation, each chapter also stands alone, so
readers can jump back and forth or skip over chapters if they wish.

1.2

LITERATURE REVIEW: EXISTING EXPLANATIONS
OF TUITION FEES AND SUBSIDIES

After a long period of neglect in political science, education systems and
education policies have recently experienced a massive increase in scholarly
attention—often under the headings of “skill formation” or “human capital investment” (Busemeyer and Trampusch 2011; Iversen and Stephens
2008; Jakobi et  al. 2009). Core contributions to the field have emphasized the fundamental importance of patterns of skill formation: most
prominently, the Varieties of Capitalism (VoC) approach (Hall and Soskice


THE POLITICS OF HIGHER EDUCATION TUITION FEES AND SUBSIDIES

7

2001) places skill formation at the core of politico-economic systems by

demonstrating that production regimes and welfare states, patterns of
inequality and redistribution, and effects of structural changes such as
globalization or skill-biased technological change cannot be understood
without taking into account the design of the education systems (EstevezAbe et al. 2001; Iversen 2005).
Scholars in the VoC tradition have, however, placed particular emphasis
on vocational education and training (VET) (Busemeyer 2009b, 2012;
Busemeyer and Trampusch 2012a, b; Crouch et  al. 2004; Estevez-Abe
et  al. 2001; Thelen 2004); higher education features much less prominently in this literature (cf. also Ansell 2008, 2010). The same holds
true for the recently evolving “social investment” literature (see Bonoli
2007; Esping-Andersen 2002; Hemerijck 2013; Morel et  al. 2012),
which places education and care systems at the core of the analytical and
political agenda: here, the focus lies almost entirely on pre-primary education, further education, and re-skilling via Active Labor Market Policies
(ALMPs)—higher education, in contrast, is largely neglected in the social
investment literature. Thus, despite the novel prominence of education
systems and policies in political science, we still know surprisingly little
about one key element of skill formation systems, namely higher education. More specifically, we know even less about higher education tuition
fees and subsidies.
Why do students in some countries pay tremendous tuition fees while
others study free of charge? Why do students in some countries receive
generous financial student aid while students in other countries remain
empty-handed? In the following sections I first present an overview of
existing explanations of tuition fees and then turn to the literature on subsidies. A “unified explanation” of tuition fees and subsidies as intertwined
phenomena has been hitherto non-existent.5
1.2.1

What Explains Tuition Fees? From Structural to PoliticoEconomic Accounts

The existing explanations of tuition fees can be grouped into two categories. The first group seeks to explain tuition fees by focusing on structural
economic factors. Within this group I distinguish the “Functionalists,”
“Inefficiency Critics,” “Baumolists,” and “Cost Sharers” and discuss each

of these in turn. The second group takes political factors into account and
is discussed subsequently.


8

J.L. GARRITZMANN

1.2.1.1 Structural Economic Explanations of Tuition Fees
The first explanation of tuition fees—and the one most visible in the
literature—argues that they are a necessary corollary of fiscal austerity
(Johnstone 2003, 2009, 2011; Johnstone and Marcucci 2010; Jongbloed
2004; Marcucci and Johnstone 2007; Sanyal and Johnstone 2011;
Vossensteyn 2009): a decline in public revenues is argued to lead to rising
financial difficulties for governments, resulting in a “sheer need for other
than governmental revenue” (Johnstone 2003: 353, 2009). Other structural factors are argued to intensify this pressure, such as growing public
demand for higher education, mounting per-student costs, a shift towards
the knowledge economy, and intensified globalization-induced economic
competition (Johnstone and Marcucci 2010). In order to cope with these
pressures, policy-makers are assumed to introduce or raise tuition fees to
obtain additional revenues. As this argument focuses on a single structural
factor (fiscal austerity) and assumes a deterministic relationship, I label this
the “Functionalistic Explanation.”
The Functionalist Explanation struggles with at least three facts. Firstly,
it cannot explain the variation of the Four Worlds of Student Finance.
It fails to explain, for example, why Finland, Sweden, or Germany are
still tuition-free although their economies have been affected by severe
downturns. Secondly, temporal variation cannot be explained by the
Functionalists, i.e., the timing of the introduction of fees. For example, why
had Japan introduced fees by the mid-twentieth century (despite a growing economy), while other countries have not pursued any such measures

despite severe fiscal constraints? Thirdly, the Functionalist Explanation
lacks a micro-mechanism explaining how austerity is believed to transmit
into policies, because governments are treated as a mere transmission belt
that transfers socio-economic pressure automatically into policies. In fact,
Johnstone and Marcucci explicitly claim that “we believe that the factors
most directly affecting the financing of higher education [i.e. fiscal austerity] … are beyond politics and ideologies” (Johnstone and Marcucci
2010: 24f). One does not have to be a political scientist, I believe, to find
this model at least somewhat simplistic.
A second group of studies attributes the origin of tuition fees to the
presumed inefficiency of higher education institutions: the “Inefficiency
Critics.” The Inefficiency Critics (e.g., Vedder 2004; Brandon 2010) feature less prominently in the scientific literature, but are very popular among
a more general audience and therefore deserve a short discussion.6 They