Luxembourg’s Skilled Immigrant Influx Boosts Economy, Challenges Norms
Anna Maria Mayda, an economist and professor at Georgetown University, discusses the importance of immigration in Luxembourg.
In Anna Maria Mayda’s view, the migrants who come to Luxembourg are highly skilled, and they are therefore likely to contribute more than average per capita. This would, according to her, allow local governments to spend more per capita. However, the economist remains cautious about the case of the Grand Duchy. "I don’t want to extrapolate too much," she reminds. The academic points out that this is a rare case, hardly generalizable to other countries.
In Luxembourg, there is a dual immigration (with 47.3% of foreign residents): low-skilled or unskilled immigration from countries in the South such as Portugal or the former Yugoslavia, and highly skilled immigration from countries such as France, Germany or Belgium. The time when the percentage of migrants with higher education (44.2%) remained lower than that of migrants without higher education (55.8%) is over. We are seeing more and more skilled immigration.
"The gaps between Luxembourgish and foreign residents have tended to widen: among Luxembourgers, the share of those with a Master’s degree or more has increased from 11.0% to 15.3% between 2011 and 2021, an increase of 4.3 percentage points; as for foreigners, going from 21.5% to 28.3%, the gain is 8.8 percentage points," explained the National Institute of Statistics and Economic Studies (Statec) in a study published on October 6, 2024. The educated individual has the chance to earn a high salary. If he earns a high salary, he will pay more taxes, thus expanding the local tax base and allowing the municipalities, at the same tax rate, to receive more revenue.
"What I would expect in the case of Luxembourg is that the arrival of highly skilled immigrants is likely to increase per capita revenue and expenditure at the local level," summarizes the economist. "In other words, in a country where public spending is high and social cohesion is based on quality services, skilled immigration can strengthen the investment capacities of local authorities: infrastructure, education, social services," comments Paperjam.lu.
Despite this demonstration, the idea that immigration could ruin local public finances is emerging. The fiscal impact of migrants mainly depends on two factors: the skill level of migrants and the tax rules in force in the host territory, concludes the study "The Fiscal Impact of Immigration," conducted by the researcher with the Luxembourg Institute of Socio-Economic Research (Liser).
