IDEA Report Finds Cross-Border Integration Fails to Deliver Regional Convergence

On Friday 28 November 2025, Fondation IDEA asbl published Working Paper No. 33, “Does Cross-Border Integration Generate Economic and Social Convergence within Greater Luxembourg?”, examining the effects of Luxembourg’s labour market on employment and demographic dynamics in neighbouring regions.

According to IDEA, Luxembourg is expected to forego €1.9 billion in 2026, nearly 6% of central government revenue, due to tax expenditures. These exceptional fiscal mechanisms serve various public policy objectives, such as facilitating access to housing, encouraging retirement savings, strengthening the purchasing power of young people, enhancing national attractiveness, supporting job seekers, and promoting research. The foundation noted, however, that many of these schemes may not be fully identified and that their effectiveness, measured against their objectives and opportunity costs, is rarely assessed.

The working paper explained that cross-border metropolisation creates both opportunities and risks, particularly the risk of widening territorial disparities. To analyse these developments, the study used an indicator measuring the ratio of jobs to total population, illustrating whether a territory is primarily “productive” or “residential”. Changes in this indicator between 2011 and 2022 highlight persistent differences in specialisation between Luxembourg (the centre) and its border regions (the periphery), as well as variations within these surrounding areas. This measurement serves as one component of assessing economic convergence.

IDEA reported that cross-border integration has continued to deepen territorial specialisation within Greater Luxembourg: the Grand Duchy increasingly concentrates employment, while several neighbouring regions show a growing residential profile. Despite a 46% rise in cross-border commuters and Luxembourg’s 26% population growth over the period, strong polarisation persists (0.76 jobs per inhabitant in Luxembourg versus 0.31 in the periphery), alongside an absence of convergence, since the ratio continued to increase in Luxembourg and remained almost stable in border territories.

The foundation added that employment trends in neighbouring regions remain positive but comparatively weak: +3% in areas where most cross-border workers reside, compared with +10% in the rest of the Greater Region and +35% in Luxembourg. The degree of integration with the Grand Duchy appears particularly influential in territories close to the border, where employment declined in the first ring (-5%) but grew in the second and third rings (+5.5% and +3.3% respectively). The paper also noted contrasting developments across the four neighbouring regions - Lorraine, Rhineland-Palatinate, Saarland and Wallonia.

By contrast, demographic growth strengthens closer to Luxembourg, ranging from +3.2% in the third ring to +8.4% in the first. IDEA underlined that the Grand Duchy has a significant positive demographic impact on surrounding regions in all three neighbouring countries, an important factor in a Greater Region where demographic trends are generally unfavourable. However, these patterns may become problematic, as national borders limit the emergence of coordinated territorial planning. The foundation stressed that the absence of a comprehensive cooperation strategy to mitigate polarisation remains a key challenge.

The full version of Working Paper No. 33, “Does Cross-Border Integration Generate Economic and Social Convergence within Greater Luxembourg?” is available on Fondation IDEA’s website.