Objectives Negative associations between non-employment and health among older people are well established and are potentially important for successful ageing. However, opportunities to improve health through re-employment or extending working lives are limited as later-life exits from employment are often unwanted and permanent. We aim to establish a greater understanding of the psychosocial mechanisms underlying non-employment and health associations in older people to identify modifiable pathways through which the negative impact of non-employment can be ameliorated.

Methods Using multilevel analysis of four waves of repeated panel data from a representative sample of 1551 older men and women reaching state retirement age in the West of Scotland from 1987/1988 to 2000/2004, we explored respondents' strength of agreement with 20 statements relating to their self-defined employment status, covering themes of functioning, social engagement, self-esteem, mental engagement, stress, and control and autonomy.

Results Compared with those in employment, respondents who were retired, unemployed, sick/disabled and home makers were more likely to agree that this resulted in poor social engagement, low self-esteem and, with the possible exception of retirees, reduced mental engagement. Associations were particularly marked among unemployed and sick/disabled respondents who also agreed that their status was a source of worry and prevented them from feeling in control.

Conclusion Older people who are not in employment are at higher risk of poor physical and mental health. Interventions targeting psychosocial mechanisms such as social and mental engagement and self-esteem offer potentially valuable opportunities to improve health outcomes and promote successful ageing.