For sake of argument, assume 90% of jobs out there are "bad jobs"--no prospect of real wage growth, declining stability, decreasing benefits--and the remaining 10% of jobs are "good jobs" (with some wage growth, stability, and benefits).
Assume also that it is widely believed that in general, to have a chance at landing a "good job" you need at least an undergraduate degree (necessary, not sufficient!).
In such a situation, will you not see everyone throw as many resources as they can into getting their kids a better chance of making it into one of those good jobs?
There's a lot you can quibble with but that's the "limited places" of significance, with demand for university education a byproduct of that more fundamental demand (for better positioning vis-a-vis the "good jobs").
This is thus more of a race to establish relative position vis-a-vis other entrants, so IMHO looking at tournament theory (etc.) is helpful for understanding the overall dynamics.