In addition to the competition of European tax schemes, current discussion increasingly centres around the competition of social security systems. This subject addresses the financial restrictions as well as the effectiveness of social security systems with respect to their social and distributive goals. The aim of this project is to comparatively analyse the European systems of social security with regard to their effectiveness in social policy terms, keeping in mind restrictions of funding. The issue is related to the question whether a unified European social policy may be considered feasible and desirable from a theoretical and empirical point of view. In the project’s first phase a systematic of European systems of social security is developed. For this purpose, various strategies of social security are identified, traced back to their traditional roots and evaluated from the viewpoint of economic and social theories on social security. Subsequently, the prevailing systems of social security in Europe are characterised with respect to the social security strategies implemented. This is done on the basis of information on their institutional features as well macroeconomic data on revenue and expenditure schemes, amongst others. A set of indicators for classifying the systems is developed that may be used in further empirical investigations. Subsequently we intend to evaluate the consequences of different strategies for the income distribution on the basis of cross-sectional data. To this end, for different European countries various measures of poverty and income inequality will be calculated and the effectiveness in reducing poverty and inequality will be assessed. In this context, we also intend to examine whether the income distribution is affected by the varying degrees of decentralisation in different countries.