In this project we will conduct comparative empirical analyses of labour market effects of income support programmes in Germany and the USA. Initially, we will identify the differences between the two countries with respect to the labour market development and the structure of relevant socio-political programmes. The following programmes will be included in the study: Unemployment benefit, income support in the case of early retirement and invalidity, and subsidies for low-wage employees. These programmes are closely intertwined and influence the incidence and duration of unemployment as well as labour force participation of specific socio-economic groups. The distribution effects of these programmes will be analysed as well. One central issue is the question as to which extent earnings-related income subsidies such as the Earned Income Tax Credit which is used in the USA for income support, can be transferred to the German situation and thus contribute to increased employment in the low-wage sector.