The project is a joint effort between researchers at the University of Uppsala, University of Essex, University of Tampere and University of Turku. The project as a whole examines how recent challenges, such as increased economic uncertainty and ethnic diversity, have affected inequality and support for the welfare state in European countries. It also investigates the work incentives embedded in the existing tax- and benefit systems and how these affect individuals? behaviour, both in the short and in the long run. This information is a crucial input to governments? decisions on how to finance the welfare system and redistribute income while maintaining incentives to work and avoiding poverty traps. The project is divided into three strands. We first measure inequality developments using multidimensional and lifetime perspectives, and assess how different EU tax and benefit systems reduce economic vulnerability. Second, we investigate support for redistribution, asking how ethnic diversity affects people?s support for the welfare state and, using methods from experimental psychology, examining the determinants of redistributive attitudes for different groups. Third, we investigate the work incentives embedded in the existing tax and benefit systems and how these affect individuals? behaviour, both in the short and in the long run, taking into account issues like the complexity of the tax design. The researchers at the University of Turku will contribute mainly to the third strand.