Luxembourg’s corporatist Scandinavian welfare system and incorporation of migrants

Claudia Hartmann-Hirsch, Senyo Fofo Ametepe

Luxembourg is the EU and OECD member state (MS) with a permanently increasing immigration and the highest share of immigrants and cross border commuters within the labour force and more so within the competitive sector.
Luxembourg has a typical Bismarckian corporatist welfare system, which has developed a generous and broad welfare regime over the last 100 years with a further important push during the last two decades. Since then, benefits offered muted steadily to middle class standards and providers were merged to universalistic national bodies, leaving behind the different former corporatist providers. Due to a higher dependency on welfare benefits due to the economic downturn, nearly all MS modified from the 1970s onwards their original systems, mostly in the sense of a liberalization with cutbacks in comparison to the former more generous provisions. There has been a shift in responsibility from the state to the individual citizen via different means such as a nonincrease of benefits, restricting eligibility (re-commodification), restructuring schemes in a radical way (recalibration) and cost containment measures (Pierson, 2001). Luxembourg however expanded and improved its system.
What is the link between immigration and the outstanding evolution of the welfare system?
The steady increase of young foreign contributors (immigrants and crossers) provided Luxembourg with the means to develop from a corporatist model to a Scandinavian with highest provisions, an emerging service sector and no significant retrenchment policy. Immigrants contribute, on average, more to the different welfare insurances than they use them, given their on average younger age, given a predominantly economic immigration and given higher employment rates than those of nationals.


Hartmann-Hirsch, C. & Ametepe, S. F. (2011). Luxembourg’s corporatist Scandinavian welfare system and incorporation of migrants (Working Papers du CEPS/INSTEAD Nr. 29). Differdange. Centre d’études de populations, de pauvreté et de politiques socio-économiques (CEPS/INSTEAD).

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