Can Diverse Societies Support Strong Welfare Systems?

Why Do Nordic Welfare States Face Challenges With Diversity?

The Nordic countries (Sweden, Denmark, Norway, Finland, and Iceland) are famous for their generous welfare systems that provide healthcare, education, and social support for all citizens. These systems have worked well alongside economic success and stable democracies. However, recent research suggests that these welfare systems may have worked well partly because these countries traditionally had very similar populations where most people shared the same culture, language, and background.

This article explores whether human tendencies to favor our own groups make it hard to maintain these generous welfare systems in societies with many different cultures and languages. When societies become more diverse, politicians may be tempted to exploit differences between groups to gain votes.

Recent changes in Sweden provide a good example. Sweden's 2024 shift toward stricter immigration policies shows how even the most committed welfare states are struggling with this tension between diversity and maintaining generous social programs.

How Natural Is Group Identity?

Research in psychology has found that favoring our own groups is a natural and deeply rooted part of human thinking. Our brains evolved during thousands of years when humans lived in competing tribes. This history created a tendency to show loyalty to members of our own group.

Modern brain science confirms these findings. Even just being around someone from a different group changes how our brains process information. Research shows that even minimal differences between groups can affect basic brain processes.

How Does This Affect Support for Welfare Programs?

These group tendencies strongly influence how people feel about welfare programs. Research shows that our attitudes toward welfare policies are shaped by deep-seated mental patterns. Our ancestors shared resources within their groups as a survival strategy, and we've inherited a psychology that supports sharing—but mainly with those we see as part of our group.

Importantly, people evolved to be cautious about those who might take resources without contributing. This creates what researchers call the deservingness judgment, where our support for helping others depends on whether we think they're making an effort to contribute. When we perceive someone as avoiding work or contribution, we become less willing to support them.

Research shows that ethnic diversity specifically affects what experts call "welfare chauvinism". Living in diverse neighborhoods tends to reduce native-born citizens' support for sharing welfare benefits with immigrants, but not with other native-born citizens. This creates what scholars call welfare chauvinism—support for generous welfare programs, but only for people seen as part of the native group.

The way this works is that increased ethnic diversity reduces feelings of solidarity with immigrants. Diversity highlights differences more than similarities, making it harder to build public support when many beneficiaries are seen as outsiders. Recent 2024 research reveals that ethnic differences don't necessarily make people judge immigrants' needs more harshly, but they do reduce feelings of sympathy toward immigrant welfare recipients. This suggests welfare chauvinism works more through emotional reactions than through logical judgments.

What Was the Historical Foundation?

Research confirms that a major reason for the success of large welfare states in Nordic countries was their homogeneous populations. When a society shares the same culture and ethnicity, its members can more easily empathize with each other. This creates a kind of group solidarity that's harder to maintain between groups with different cultures, religions, or languages.

Nordic countries historically had very similar societies with shared languages, culture, and history. This similarity was crucial because their shared values of equality, welfare, and liberalism became the foundation for extensive welfare systems.

What Makes Welfare States Vulnerable in Diverse Societies?

Researchers call this challenge the progressive dilemma—the tension between supporting both multiculturalism and generous welfare programs. The idea is that there's an inherent conflict between embracing diversity and maintaining strong support for redistribution programs.

Studies have shown that native Swedes who live in areas with larger immigrant populations are less likely to support generous welfare. This creates a cycle where diversity reduces welfare support, which increases inequality, which further reduces social cohesion.

How Do Politicians Respond to These Tensions?

Research shows how ethnic diversity often intensifies political conflict and reduces welfare generosity. Political leaders can gain advantage by highlighting ethnic divisions because in diverse societies, political competition becomes more complicated. Instead of just debating economic issues, politics also involves debates about race, ethnicity, or religion.

This multi-dimensional nature of politics in diverse societies means the political system is likely to produce a smaller welfare state than it would in more homogeneous societies. This creates a strong temptation for politicians to appeal to group identity through welfare chauvinism.

What Is Sweden's Transformation?

Sweden shows this challenge clearly. Sweden now has 20% foreign-born residents, up from 11% in 2000. The country has dramatically shifted from being the most welcoming country in the EU to adopting increasingly restrictive and selective immigration policies.

The Swedish government is now implementing what it calls a "paradigm shift" with a migration policy that aims to be more sustainable long-term. Sweden is changing its focus from being a country that welcomes asylum seekers to one that prioritizes labor immigration. The government openly acknowledges that extensive immigration in recent years has caused major strains on Swedish society.

What Is Denmark's Approach?

Denmark represents a different approach, showing how diversity challenges can lead to strict integration policies. Denmark stands out as having one of Europe's most distinctive approaches to immigration. Denmark has gone further than most countries by introducing increasingly demanding integration requirements.

Danish concerns about refugees are based on a belief that many newcomers will be unable to adapt to the Danish system, where high wages and generous social policies are seen as the reward for hard work and paying into the expensive system. Denmark's approach includes strict rules requiring that migrants must not have received social benefits for more than four months over the five years before applying for citizenship.

Why Is Trust the Foundation of Welfare States?

Research shows that social trust encourages cooperation between people, which helps explain why ethnic diversity often makes it harder to maintain generous welfare policies. At the individual level, social trust is linked to volunteering, donating to charity, tolerance, and other positive social behaviors.

Overall, societies with more high-trusting people tend to have more efficient decision-making, better democratic government, and higher economic growth. This makes understanding how ethnic diversity affects trust extremely important for addressing the challenges that increasingly diverse Western societies are facing.

What Is the Language Challenge?

Research on language diversity reveals additional challenges for welfare state cohesion. Language represents who we are and carries our heritage, creating one way we define "communities". Language differences create trust barriers in multilingual communities that are difficult to form and maintain.

Personal discomfort becomes the biggest trust barrier in diverse language environments. The fear of the unknown and risk of embarrassment or misunderstanding strongly discourage people from crossing language barriers. This creates fragmentation that undermines the shared identity necessary for welfare state solidarity.

How Is Sweden's Welfare State Changing?

Sweden's reputation has shifted from being a model welfare state to becoming a cautionary example. Foreign-born citizens now make up 20 percent of Sweden's population, creating unprecedented challenges for welfare state sustainability. Employment rates among immigrants are substantially lower than among native-born Swedes, creating financial pressures on generous welfare systems.

Successfully integrating immigrants into the labor market is crucial for Nordic societies, as their generous welfare systems depend on high employment levels. For immigrants, finding work increases incomes and improves wellbeing, but the fair distribution of employment is also important for maintaining social cohesion.