The major goal of this study is to test the direction and strength of the relations of low-income single mothers’ depressive symptoms to their employment and income experiences over a time period following major welfare policy changes in the U.S. (2001 to 2003). The Panel Study of Income Dynamics provided data on 623 low-income, single mothers. The economic characteristics studied were: employment status, hours of work, wages, earnings, a job’s provision of personal control, family income, and welfare receipt. The mental health measure was the K-6 Non-Specific Psychological Distress Scale. The study adds to our understanding of the temporal relations between employment experiences and mental health by testing the social causation, social selection, and interactionist (bidirectional) perspectives. Specifically, this study tested the different perspectives with a wide range of economic indicators, tested mechanisms that may link mental and economic well-being, and combined multiple employment factors to see if patterns emerged that related uniquely to psychological distress. The findings supported social selection as earlier psychological distress predicted future employment, hours, wages, earnings, household income, and welfare receipt. The tested mediator of days of lost work affected by psychological distress indicated an indirect effect of poor mental health predicting diminished job productivity that, in turn, predicted reduced employment, hours, wages, and earnings. Results were similar for subgroups of mothers based on the age of their youngest child or prior welfare history. The single significant finding was that a longer span of welfare receipt predicted worse mental health as compared to mothers who reported a shorter period of welfare receipt. Latent class analysis identified three patterns of employment and welfare receipt across time: a) exchanged earnings for welfare, b) high employment and earnings growth with reduced welfare, and c) moderate employment growth. The groups that exchanged earnings for welfare (about 10% of the sample) evidenced increased psychological distress compared to mothers with high or moderate employment growth. Support for the social selection hypothesis suggests that policies and interventions that help low-income mothers improve their psychological well-being could also enhance their economic well-being. Implications for future research could explore the effects of such policies. / text