High housing costs deter low- and medium-skilled workers from moving, but not highly skilled workers, who mainly respond to wage gaps. This skill-selective mobility has doubled the brain drain from French regions to Luxembourg, widening regional skill disparities. This shows that core-periphery dynamics must be analyzed in terms of skills, not just people.

In Luxembourg's tight labor market, foreign workers absorb demand shocks, while natives increasingly transition to better-paid, sheltered public-sector jobs. Using matched employer-employee data, the paper demonstrates that, when combined with native reallocation and productivity gains, immigration leaves natives better off in terms of wages and job quality.

Using full-population registry data, the paper reveals an extreme concentration of property wealth. The top 1% owns more than a third of it, most of which is land. This inequality is driven by non-ownership and growing disparities among owners, raising concerns about fairness, housing access, and attracting talent.

A general equilibrium model shows that foreign labor inflows between 2001 and 2023 generated significant welfare gains for natives—over 40% for low- and middle-skilled homeowners, and 30% for tenants. However, high-skilled natives gained less, and some scenarios revealed modest losses for high-skilled tenants due to competition and rising rents.

In Luxembourg, where 74% of residents have a foreign background, most people view immigration positively, both economically and culturally. Pro-immigration views are strongest among first- and second-generation immigrants. Local exposure primarily influences perceived optimal immigration levels, particularly following recent inflows from non-European countries.

The paper presents a dynamic LUTI model with sub-annual time steps that can simulate housing, land use, and transportation across borders simultaneously. When applied to the Greater Region, the model replicates commuting and land use patterns. It demonstrates that transportation investments alone provide only temporary relief and that coordinated housing policies are necessary.