The politics of opting out: explaining educational financing and popular support for public spending

Abstract

In this paper, we address two empirical puzzles: Why are cross-country differences in the division of labour between public and private education funding so large and why are they politically sustainable in the long term? We argue that electoral institutions play a crucial role in shaping politico-economic distributive coalitions that affected the original division of labour in education financing. In proportional representation systems, the lower and middle classes formed a coalition supporting the establishment of a system with a large share of public funding. In majoritarian systems, in contrast, the middle class voters aligned with the upper income class and supported private education spending instead. Once established, institutional arrangements create feedback effects on the micro-level of attitudes, reinforcing political support even among upper middle classes in public systems. These hypotheses are tested empirically both on the micro level of preferences as well as on the macro level with aggregate data and survey data from the ISSP for 20 Organization for Economic Co-operation and Development countries.