This article aims at gaining more insight in the effect of labour market participation on health in the Dutch context. The positive relation between labour market participation and health has often been emphasized in the policy discussions. However, existing research insufficiently takes into account the reciprocal relationship between labour market participation and health. In this article, we control for the role of background variables which are likely to influence both labour market participation and health by using panel techniques. We use data from the Dutch Labour Supply Panel (formerly called ‘OSA Work Supply Panel’). We find that the statement that ‘work is good for your health’ should be nuanced. Our results show that the effect of labour market participation on health is dependent on characteristics of the individual, weekly working time, job characteristics, and non-paid activities and the possibility to combine those with paid work, and available types of non-work.