How do higher education (HE) systems impact on the sectoral composition of national economies? Recently, it has been argued that characteristics of HE systems such as the levels of subsidization and enrolment interact with the degree of income inequality to form incentives that structure career choices of university students and non-students alike. First, since jobs in the service sector typically require an university degree, countries with low enrolment rates experience a slower transition to a predominantly service-oriented economy. Secondly, in countries with mass enrolment, differences in the type of service sector employment arise: Where students amass considerable debts over the course of their studies and income inequality is high, there is both a need and an opportunity to work the in so-called dynamic service sectors, characterized by high wages and productivity growth. In countries offering free higher education and displaying low income inequality, on the other hand, students are funnelled into non-dynamic services such as the public sector. As a consequence, we argue, HE systems help to create constituencies with distinct political preferences. High-skill workers employed in the dynamic service sector are likely to oppose policy measures aimed at reducing income inequality and regulating the service economy and thus prefer conservative parties. Their counterparts working in the non-dynamic sector, on the other hand, are hypothesized to support high levels of public spending and non-pecuniary benefits of labour market policy, resulting in a preference for left-leaning parties. These claims are put to the test by conducting a multi-level analysis using the World Value Survey and aggregate data from OECD countries depicting characteristics of HE systems as well as the service sector economy. Results will add to our understanding of distributive battles over higher education and provide possible implications of far-reaching policy change such as that imposed by the Bologna Process.
