This document summarizes a presentation about the political economy of education and training reforms in Western welfare states. It discusses how: 1) Political coalitions formed during critical post-WWII decades shaped the development of different education systems, including collective apprenticeship models in Germany and statist school-based models in Sweden. 2) These emerging paths created distinct "worlds of human capital formation" with consequences for social inequality, like higher youth unemployment and stratification in liberal market economies like the UK. 3) The interplay between partisan politics and socioeconomic institutions, like strong unions supporting school-based training in Sweden, explains why different skill formation regimes developed in different countries.

1. Skills and inequality:
The political economy of education and
training reforms in Western welfare states
Marius R. Busemeyer
University of Konstanz
ExCID Academic Seminar Series
University of Oslo, April 23, 2015

2. Introduction
“Education is special.” (Harold Wilensky 1975: 3)
Overarching question:
Political and institutional linkages between education and the welfare
state
Core argument:
Institutional choices during critical juncture of postwar decades…
…shape development paths of education and training systems
…have consequences for contemporary patterns of social inequality

3. Overview
1. Motivation: Worlds of human capital formation
2. Theoretical building blocks: Historical institutionalism, power
resources and varieties of capitalism
3. Three case studies: Germany, Sweden and England (UK)
4. Implications for social inequality
5. Conclusions

4. Motivation: Worlds of human capital formation
- Starting point: (European) education systems quite similar in mid
20th century:
Elitist higher education
Stratified secondary school systems
Remnants of apprenticeship training, usually in the hands of
employers and unions
- Today: different education and training regimes that appear to stable
in the long-term
 Worlds of human capital formation, related to welfare state regimes
 Research question: Which factors explain the emergence of these
different regimes?

5. Characteristics of skill formation regimes
- Def. “skill formation regime”: self-reinforcing configuration of
institutions at the intersection between labor markets and education
and training systems
 Focus on upper and post-secondary education: relationship
between general academic education and vocational education and
training
 Role of the state vs. private actors (households, market) in provision
and financing of education

6. Characteristics of skill formation regimes (II)

7. Decommodification and stratification
in education and training regimes

8. Theoretical building blocks (I)
Historical institutionalism (Streeck, Thelen, Pierson,…):
- Existing institutions (policy legacies) strongly influence
contemporary patterns of policy-making
- Path dependencies develop over time: significant path changes
become less likely because of “lock-in” effects
- Path change is possible during “critical junctures”: “punctuated
equilibrium”-model of institutional change
- Recent research: significant institutional change can also come
about in incremental steps (Streeck/Thelen)

9. Theoretical building blocks (II)
Power resources/partisan theory (Esping-Andersen, Korpi, Stephens):
- Balance of power between the organized representatives of socio-
economic classes (“Capital vs. Labor”) shape patterns of institutional
change
- Arenas of political conflict:
Within parliament/government  role of political parties
In the labor market arenas  organized interests, e.g. unions,
employers’ associations, etc.
 Who is in power in government has an influence on patterns of
policy-making

10. Theoretical building blocks (III)
“Varieties of capitalism” (Hall, Soskice, Iversen):
- Institutionalist theory: existing institutions shape firms’ decisions on
investment, skill formation, innovation etc. (“strategy follows
structure”)
- Two different “varieties of capitalism” which are self-reinforcing long-
term equilibria:
Liberal market economies: coordination between firms via
market mechanism
Coordinated market economies: coordination via non-market
mechanisms, i.e. associations

11. Education and training in the VoC framework
- Education and training institutions important part of institutional
framework, shaping product market strategies and innovation
patterns
dominance of general academic education (“general skills”) in
LMEs  encourages radical innovation
dominance of VET (“specific or occupational skills”) in CMEs 
encourages incremental innovation
 Different skill formation regimes create different economic pay-offs
 Long-term survival of VET as an alternative to academic education
depends on the existence of cross-class coalitions between
employers and unions (as is common in CMEs)

12. Combining theories: Partisan politics in context
Partisan theory:
Partisan composition of governments matters, in particular during
critical junctures of policy development.
Three extensions:
- Parties do not only care about policy output, but also about process
 Difference between Conservatives and Christian democrats
- Interplay between partisan forces and socio-economic context
 Varieties of Capitalism shape menu of feasible policy options
- Focus on long-term effects of partisanship rather than short-term
effects

13. Point of
departure:
Education
systems post
WWII
VET survives
VET declines: liberal
skill formation regimes
Collective skill
formation regime
Statist skill
formation regime
Economic
coordination
UK
SWE
DE
Political
coalitions

14. Sweden: Political coalitions
Dominant coalitions in the postwar era:
- Labor market arena: cross-class compromise between unions and
employers after the Saltsjöbaden agreement
- Political arena: “red-green” coalition between social democrats and
centrist Farmers’ Party
- Hegemonial position of social democrats in government
- Related to privileged access of trade unions to policy-making arena

15. Sweden: Reforms
Long-term project: establishing the principle of comprehensive
education in all sectors of the education system
1950s: experimental phase
1962: introduction of comprehensive school up to grade 9
(lower secondary education)
1969/1972: comprehensivation of upper secondary education:
integration of VET into general secondary school
system
1977 comprehensivation of higher education
1980s/1990s: various attempts to increase employer
involvement, largely failed
 Institutionalization of statist skill formation regime

16. Germany: Political coalitions
Dominant coalitions in the postwar era:
- Labor market arena: emerging cross-class coalition between
employers and unions, but still fragile in the 1950s
 Collective VET system depends on, but also helps to consolidate
cross-class cooperation
- Political arena:
Until 1969: dominant position of the Christian democrats
But: informal (and between 1966-69 formal) Grand Coalition
between social and Christian democrats
 supports “politics of mediation” and cross-class compromise, but
employers’ interests more influential due to dominant Christian
democrats

17. Germany: Reforms
- 1969 Berufsbildungsgesetz:
statutory framework for firm-based dual training
institutionalization of corporatist governance structure
but: principle of employer autonomy is preserved
- 1970s: failure of reform attempts to transform the collective model
into a more statist (i.e. Scandinavian) regime type
 Balance of power more in favor of employers and Christian
democrats
- Until recently, limited success in transforming segregated secondary
school system or improving the permeability between VET and HE
 Institutionalization of skill formation regime with firm-based dual
apprenticeship model at its core

18. England (UK): Political coalitions
Dominant coalitions in the postwar era:
- Changing government majorities between Labour and
Conservatives
- In 1950s and 1960s: consensus-oriented policy-making, but then
increasing partisan conflict, in particular in the 1970s and 1980s
- Labor market arena:
no sustainable cross-class coalition between employers and
unions
dominance of craft-based unions over industry-based unions
government attempts of establishing corporatist framework fail

19. England (UK): Reforms
- Gradual introduction of comprehensive secondary education, but
with private component
- Attempts to establish corporatist framework for VET:
1964 Industrial Training Act
1973 Employment and Training Act
- but: no long-term cross-class consensus on VET, collective
institutions dismantled by Thatcher government in the 1980s
- 1980s: decline of traditional apprenticeship in industry,
transformation of VET into labor market social policy program
- Shift in balance of power in VET: dominance of employer interests,
unions get crowded out
- 1990s and after: repeated attempts to resuscitate apprenticeship fail

20. Preliminary conclusion from case studies
- Political coalitions in critical juncture of development of post-
secondary education and training regimes shape development
paths:
Sweden: cross-class coalition with dominant Left
Germany: cross-class coalition with dominant Right, Christian
Democracy as driving force of firm-based VET
UK: no cross-class coalition, dominance of market liberalism
- Emerging path dependencies:
Sweden: social partners support school-based training
Germany: social partners support firm-based training
UK: „tenacity of voluntarism“ (D. King)
 Implications for social inequality!?

21. Socio-economic inequality and
educational stratification

22. Post-secondary enrolment patterns and inequality

25. Youth unemployment

26. Skill formation regimes in international comparison
Source: Busemeyer/Iversen 2012, Collective Skill
Systems, Wage Bargaining, and Labor Market
Stratification.

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31. Wage inequality and private spending share

32. (1) (2) (3) (4)
VARIABLES Level of Wage Inequality (D9-D1 Ratio)
LDV 0.986*** 0.973***
(0.00882) (0.0119)
GDP Growth -0.000610 0.00222 -0.00269 -0.00458
(0.00247) (0.00342) (0.00233) (0.00335)
Unemployment 0.00184** 0.00831 0.00304*** 0.0322***
(0.000755) (0.00511) (0.000945) (0.00552)
Deindustrialization -0.0894 0.783* -0.0641 0.861*
(0.0911) (0.412) (0.0776) (0.482)
Left partisanship 0.000111 -0.000139 0.000137 -0.000459**
(8.53e-05) (0.000310) (8.58e-05) (0.000199)
Wage Barganining
Centralization
-0.000655 -0.0662*** -0.00122 -0.0192**
(0.00534) (0.0146) (0.00563) (0.00931)
Social transfer spending -0.00288** -0.0545***
(0.00135) (0.00520)
Private Share in Education
Financing
0.00249*** 0.0248*** 0.00252*** 0.0208***
(0.000847) (0.00634) (0.000821) (0.00339)
Constant 0.0815 2.622*** 0.171** 3.943***
(0.0591) (0.273) (0.0753) (0.335)
Observations 276 280 268 271
R-squared 0.995 0.958 0.995 0.895
Number of cntry_nr 16 16 16 16
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

33. Conclusion
- Skill formation regimes started from a relatively similar position in
the immediate post-war period, but developed into (at least) three
distinct types in the subsequent decades
- Interplay between partisan politics and socio-economic institutions
during critical junctures of historical development explain why this
happened
- Institutional set-up of skill formation regimes has important
consequences for contemporary patterns of educational and social
inequality
 Role of VET as an important factor mitigating social inequality is
often underestimated in public debates
 Public/private financing in HE matters

34. Thanks for listening!