Urban segregation and economic inequality in Sweden (1991–2017): A decomposition analysis

This article bridges the gap between inequality and segregation research by introducing a method to decompose income segregation across spatial units, income groups, and income sources, applied to detailed full-population register data for Sweden from 1991 to 2017. Sweden’s sharp rise in income inequality—driven largely by capital income gains among top earners—has coincided with intensifying spatial sorting, especially within cities. We find that segregation is most pronounced at the neighborhood level, where income gaps exceed those between regions; regional segregation has risen by 5%, while neighborhood segregation has increased by 15%, entirely due to capital income segregation. Low-income families, disproportionately foreign-born, have become increasingly concentrated in the poorest neighborhoods, and high-income households have moved away—a pattern shaped by urbanization, immigration, and a shrinking rental housing supply. These trends appear driven less by changes in labor income taxation or welfare benefits than by lower taxation of capital income, wealth, and property, propelling the growing wealth concentration found in the inequality literature.