AbstractThe relationship between employment status and psychological well‐being is investigated in a longitudinal study of 16‐year‐old school leavers. Significant differences between employed, unemployed and government training scheme groups on a number of measures of well‐being were found, these differences persisting after adjustment for individual differences and for other factors known to affect mental health. Implications for clinical practice and public health are considered and possible explanations for the poorer psychological health of the unemployed group are di