The negative effects of unemployment on psychological health are well documented, yet Kasl's (1982) reverse causation hypothesis is that positive psychological health, and in particular self-esteem, facilitates re-employment. The aim of this study was to investigate this proposal by assessing levels of self-esteem, cognitive appraisals and coping efforts among unemployed persons and relating these factors to their employment status six months later. Two hundred and one unemployed (49 per cent female, 51 per cent male; mean age = 32.41 ± 10.18 years) and 128 employed respondents (59 per cent female, 41 per cent male; mean age = 35.0 ± 11.73 years) participated in the study. Participants completed the Adult Self-Perception Profile, Access to Categories of Experience, Locus of Control, Deakin Coping Scale, and the Meaningful Leisure Activities Questionnaire at baseline and at six-month follow-up using a mail-out survey. Comparison of baseline appraisals revealed that future re-employed participants rated their latent deprivation lower and their internal locus of control higher than those continuously unemployed, and they also derived more internal meaning from leisure activities. Overall, the results provide support for Kasl's reverse causation hypothesis extended to these other domains of psychological health. Intervention strategies designed to incorporate the promotion of these factors are discussed. Copyright © 2002 John Wiley & Sons, Ltd.