Nordic welfare state changes especially in the light of migration and the financial crisis

Abstract

Known for their encompassing welfare model and low levels of inequality the Nordic countries also faced great economic and demographic challenges in the 2000s and 2010s. To varying degrees the financial crisis hit the Nordic countries just as migration was massive, especially in 2015-16 in Sweden. How did the countries respond in terms of reforming their welfare policies? Can the Nordic countries still be said to have distinct universal and generous welfare policies financed by progressive taxes resulting in low levels of inequality? This chapter provides answers to these two main questions through an analysis of policy changes and of inequality. First, the chapter provide core information about the development. Secondly, the chapter describes policy changes for unemployment benefits and social assistance and in personal income taxation, i.e. tax and benefits that are susceptible to change public expenditure and that might increase inequality, and link these changes to debates on austerity and migration. The next section of the chapter compares the trends across the Nordic countries. Hence, the comparative study identifies if changes are mainly driven by austerity or migration and what the similarities and differences are across the policy areas (unemployment, minimum income, and taxation). The chapter also looks into what has been labelled the “necessary politics” and that labour supply reforms were argued to be effective by that “it should pay to work”. The analysis includes the four Nordic countries as far as possible: Denmark, Finland, Norway and Sweden .