Aim: The aim of this study was to examine whether health status (number of chronic diseases, health shock and use of tranquilizers/sleeping pills) is related to labour-market outcomes later in life.

Methods: Twin data for Finnish men and women who were at least 33 years old in 1990 were linked to comprehensive register-based information on unemployment and the incidence of disability pension. We used the within-twin dimension of the data to account for shared family and genetic factors. Self-reported information on the number of diagnosed chronic diseases, health shock and drug use were obtained from the 1975 and 1981 twin surveys, when the twins were at least 18 years old. Unemployment months and the incidence of disability pension were measured during prime working age over the 1990–2004/2009 period.

Results: Poor health status is significantly positively related to unemployment and the incidence of disability pension. The results are robust to controlling for shared family and genetic factors and the key measures of risky health behaviours (alcohol use, lifetime smoking and body mass index).

Conclusions: Health status is a fundamental determinant of long-term labour-market outcomes.