The political economy literature has become preoccupied with human capital formation in recent years. Overwhelmingly, human capital formation has been understood as the training of individual (future) workers (Boix 1998; Busemeyer 2007; 2009; Iversen & Stephens 2008; Ansell 2010; Jensen 2011). Such training is a crucial aspect of human capital formation, but the only one. Equally important is the production of new knowledge, R & D, which essentially forms the backbone of all modern economies, albeit to varying degrees. The paper studies the relationship between investment in tertiary training and R & D. Both hold the promise of recalibrating the industrial economy to the post-industrial one. Yet, the former arguably is more redistributive than the latter – even though, in an absolute sense, tertiary education may not be terribly redistributive compared to other social programs (Iversen & Stephens 2008). This indicates that we might expect to find partisan patterns in the development of the tertiary training-R & D ratio with right-wing governments all else equal favoring R & D over tertiary training. In particular, we should expect to see pronounced partisan differences as the socio-economic pressure for transform of the economy intensifies.
