The substantial rise in expenditures for welfare programs during the recent decade has created much concern; not least in the Nordic countries having a strong emphasis on egalitarian policies with a high level of public provision of services and a large s hare of public sector employment. However, due to the aging of the population, a crucial requirement for sustainability of the Nordic model is a proper design of the tax-benefit system as well as of public services. Designing a more effective policy requi res an improved understanding of the consequences of present welfare policies. For example, one of the consequences of existing policy measures is a diminution of the incentives to work. For many people the difference between incomes when working and when receiving welfare support is rather small, leaving too little incentives to work. This concern sets the stage for this project, where the overarching objective is to evaluate performance of the Norwegian welfare state, and compare it to the welfare syste ms of other OECD countries. This project is lead by senior research fellow Rolf Aaberge and involves a core staff employed in Statistics Norway and researchers from leading universities in Europe and the U.S.