This article reports results from a two-wave panel study representativ
e of long-term unemployed in Norway in 1991-92. We looked especially a
t the impact of re-employment on psychological distress. Is any job be
tter than unemployment, and does re-employment improve mental health d
ramatically? Our findings showed that re-employed people did not have
less distress than those still unemployed and outside the labour force
when other factors were controlled for. What mattered was that re-emp
loyment represented a secure job. High risk of distress was especially
persistent among those who experienced financial hardship and marital
break-up and who had not had previous psychological distress. Women e
xhibited higher distress than men, and older persons higher distress t
han younger. To a certain extent, psychological distress was unrelated
to the unemployment situation itself, but seemed instead to be due to
a selective process ending in long-term unemployment experienced by p
ersons with psychological distress at the outset of joblessness. These
persons experienced cumulative problems related to poor economic situ
ations and marginal positions in the labour-market. Earlier research h
as tended to overestimate the emotional damage created by job loss per
se and the beneficial effects of re-employment. (C) Scandinavian Soci
ological Association 1998.