Sweden: Inequality in Sweden grows much faster than in the Nordics overall

Income inequality is increasing faster in Sweden than it is for their Nordic neighbours and Sweden still has by far the highest share of foreign-born people in the Nordic Region. The State of the Nordic Region 2020 report highlights, among other things, that successful integration of young immigrants could provide a welcome economic boost, especially to Swedish rural regions.

Income inequality highest in Sweden

From having the second-lowest level of inequality in 2000, by 2017, Sweden had the highest level of income inequality in the Nordic Region. The overall income inequality between households in the same municipality was also higher in Sweden than in the other Nordic countries.

Although income inequality has increased in all the Nordic countries, there are large regional differences within all the countries, with capital regions typically having higher income levels than other parts of the country. The highest intra-municipal income inequalities in the Nordic Region are found in Danderyd and Lidingö. In Danderyd, this is e.g. due to the very large amount of disposable income, excluding capital, of the highest-earning households.

Taken as a whole, the combined Nordic GDP makes the region the 12th largest economy in the world. Sweden makes out one-third of that economy.

Large minority groups in Swedish regions

Sweden still has the highest share of foreign-born people in the Nordic Region, 19%, compared to 16% in Norway and Iceland, 12% in Denmark and only 7% in Finland.

In Nordic comparison, a relatively large number of Swedish regions and municipalities have high shares of foreign-born young people in their local populations – over 10% of the population aged 0-19. Successful integration of these newcomers, many of whom come from countries experiencing major conflict or civil unrest, could significantly contribute to social and economic progress.

Overall, many Swedish rural regions have seen a growth in the share of younger people, aged 20-29, over the last decades, indicating a potential for future population growth.

Ageing populations

Sweden has long had the oldest population profile in the Nordic Region but was recently overtaken by Finland and Åland. People aged 65 or more now outnumber children and young people under 18 as a share of the total population in Sweden, which is also the case in Denmark and Finland. In Norway, the two population groups are equal in size, while Iceland still has more children than older people.

The ageing of the population has widespread impacts on the economy and labour market. 25 Swedish municipalities, mainly in Northern Sweden, are among the Nordic municipalities where the highest proportion of the populations has a remaining life expectancy of less than 15 years. Stockholm, on the other hand, has one of the lowest ratios in this category. Furthermore, 67% of all Swedish municipalities are projected to see a decrease in the size of their working-age population by 2040.

Stockholm ranked third in the Regional Potential Index 2020

The report ranks all regions in the Nordic countries in the Regional Potential Index, comparing them on a range of demographic, economic and labour force indicators. In the 2020 edition, the regions of Sweden are spread rather evenly throughout the ranking. Oslo takes the top spot, with the highest scores of all within demography and economy, while Stockholm is ranked 3rd, just below the Capital Region of Denmark.

Uppsala stands out as the highest-ranked intermediate region. The report highlights the presence of a large university and a strong life science sector as Uppsala’s key strengths, also delivering the highest level of R&D investment per capita of all intermediate regions.

Blekinge, however, is the region that dropped the furthest since the last index from 2018. It has gone down 11 spots, mainly due to weaker labour and economic factors compared to the rest of the Nordics. Blekinge had the highest youth unemployment rate of all Nordic regions in 2018, and one of the lowest GRP rates per capita.

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