Mathers and Schofield, from the Australian Institute of Health and Welfare, review recent studies, including Australian research, on the health effects of unemployment and the mechanisms by which unemployment causes adverse health outcomes. The relationship is complex: ill-health also causes unemployment, and confounding factors include socioeconomic status and lifestyle. However, longitudinal studies with a range of designs provide reasonably good evidence that unemployment itself is detrimental to health and has an impact on health outcomes--increasing mortality rates, causing physical and mental ill-health and greater use of health services.