This study aims at examining transitions in and out of labour market as well as transitions from one benefit to another. More specifically, it analyses incentive structures embedded in benefit and tax systems which may affect such transitions. This involves benefit levels compared to income from work, the entitlement for the duration of benefits, possible disincentives to return to work and incentives to stay on benefits. For the purpose of this study, the following four hypothetical routes for exiting the labour market have been defined

• activation route,

• long-term unemployment and social exclusion route, 

• early retirement route and 

• sickness and disability route.