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Despite low levels of youth unemployment in Norway, concerns have been raised about the high numbers of youth in inactivity, receiving health related social security benefits. It is argued that parts of the system of social security may work as welfare traps. OECD recommends welfare policies with the overall aim of fostering youth employability, not benefit dependency. In this article we use a unique combination of register data and survey data from the panel survey “work, lifestyle and health”. This survey follows a representative sample of the cohorts born between 1965 and 1968 from 1985 through follow-ups in 1987, 1989, 1993 and 2003. This allows us to follow individual life trajectories from ages 17-20 to 35-39. The aim of the article is first to study the impact of substance abuse upon risk of receiving social assistance, since previous research has found that receiving social assistance increases the probability of labour market exclusion in adulthood. Second, we analyse the impact of receiving social assistance, to have mental health problems and substance abuse in youth and consequences for labour market integration in adulthood. Analyses reveal that neither cannabis use nor alcohol consumption in youth have a direct effect on the risk of labour market exclusion in adulthood. However, cannabis use increases the probability of receiving social assistance, which in turn increases risk of labour market exclusion in adulthood. Mental health problems in youth increase risk for later labour market exclusion, but these effects are mediated through factors like problem behaviour related to alcohol abuse and the use of illegal drugs other than cannabis. Receiving social assistance in youth has long time effects on the risk of labour market exclusion, especially for individuals from the lower socioeconomic groups.

Lost in transition? Substance abuse and risk of labour market exclusion from youth to adulthood