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Studies that have found an association between unemployment and psychological depression often fail to establish the direction of causal influence. Analyses of Epidemiologic Catchment Area panel data revealed that of employed respondents not diagnosed with major depression at first interview, those who became unemployed had over twice the risk of increased depressive symptoms and of becoming clinically depressed as those who continued employed. Although the increase in symptoms was statistically significant, the effect on clinical depression was not, possibly because of the low power of the test. The reverse causal path from clinical depression at Time 1 to becoming unemployed by Time 2 was not supported. The unemployment rate in the respondent's community at time of interview was not related directly to psychological depression but appeared associated indirectly with depression via its …