The development of Sweden’s welfare state is deeply tied to the concept of Folkhemmet, or "The People's Home," which became central to Swedish social policy in the 20th century. This idea, which gained prominence under Per Albin Hansson, leader of the Social Democrats, sought to transform Sweden into a society based on equality, solidarity, and collective responsibility. It was during this era that Sweden's modern welfare state truly took shape, building on earlier reforms and expanding into a comprehensive system of social security.

The roots of Swedish welfare trace back to the 17th century, when the Church of Sweden organized poor relief under the Beggar Law of 1642 and the Civil Code of 1734, mandating parishes to maintain almshouses. In 1847, the state took over poor relief with the Poor Law, creating a public system funded by local taxes and separating welfare from church control. Over time, private charity and harsh practices like child auctions complemented this system. By the late 19th century, sick benefit societies emerged, and in 1913, Sweden introduced national pensions under the National Pension Act.

The Folkhemmet era, starting in the 1930s, significantly transformed this early framework into a more humane and inclusive welfare state. Folkhemmet emphasized that society should function like a family, where all citizens were taken care of and no one was left behind. This vision was built on the idea of class cooperation, and it rejected the old divisions between the rich and the poor, focusing instead on shared well-being. The Poor Care Law of 1918 modernized the welfare system by abolishing outdated practices like child auctions and converting poorhouses into retirement homes. It reflected a growing focus on social responsibility, aligned with the Folkhemmet ideal of social unity and care.

This vision became reality with a series of reforms that cemented Sweden's welfare state. In 1934, unemployment benefits were regulated and subsidized, and by the mid-century, the state took further control over social insurance systems. The Social Help Law of 1956 marked the final transformation of the poor relief system into a modern welfare system, offering broad social security to all citizens and reflecting the goals of Folkhemmet.

In the 1960s, private sick benefit societies were replaced with public insurance systems, and the government began regulating unemployment benefits more directly, further reinforcing the social safety net. The Folkhemmet ideal not only shaped welfare policies but also fostered a deep sense of social responsibility that still characterizes Sweden's welfare state today.