The Effects of Immigration on the Social Democratic Welfare State

Recent models show that segregation can lead to economic inequality between groups over time, even if they start out as equals.  This should present a unique institutional problem under conditions in which both segregation and a strong welfare state exist, as segregation should strain an institution designed to reduce inequality.  However, I show that a stable equilibrium/feedback loop exists wherein the welfare state persists through expansion.  I then apply the model to a case study of Sweden, arguing that state employment of immigrant women is an example of endogenous institutional change.