Figures from the Prince's Trust suggest the problems faced by young Scots linked to unemployment and the anxiety this triggers.
The charity's third annual Youth Index, which measures the happiness of children and teenagers, suggested 35 per cent had sleep disorders and suffered from insomnia.
Some 22 per cent of the 16 to 25-year-olds who took part in the survey said they felt depressed all or most of the time, and one in six - 18 per cent - had self-harmed. More than 25 per cent said they felt insecure all or most of the time, while 24 per cent said they felt isolated.
The report covers a range of areas, from family life to physical and emotional health, and it paints a bleak picture, as the UK government gears up to launch its happiness index in the spring.
The charity said the index, now in its third year, was at its lowest point so far, with the most significant decline around young people's emotional health.
It also shows how those who are long-term unemployed are significantly less happy across all areas of their lives. Geraldine Gammell, director of the Prince's Trust Scotland, said: "Unemployment presents a very real and frightening mental health problem for young people in Scotland - and the longer they are out of work, the greater the risk.
"The Prince's Trust can help vulnerable young people back on their feet and into work, building motivation and self- esteem."
The report, based on interviews with 2,170 young people across the UK, also showed those not in employment, education or training were significantly more likely to lack a sense of belonging, with those out of work for a year or longer even more likely to feel this way.
Almost two-thirds of young people in work believe their job is an important part of their identity.
Carolyn Roberts, head of policy and campaigns for the Scottish Association for Mental Health (SAMH), said of the report: "We know that unemployment is often bad for your mental health, and this report shows the effect it can have on young people.
"Being in employment gives you a sense of purpose as well as increased income, but people who've had a mental health problem often find it hard to get into work.
"SAMH's current campaign, 'Dismissed?', aims to make it easier for people who've had mental health problems to get jobs, which should help the young people surveyed by the Prince's Trust."
The Scottish Government said it was making efforts to cut unemployment. "We are acting to create and protect jobs in Scotland, helping people overcome difficulties associated with unemployment," a spokesman said. "The most recent figures showed the fifth consecutive reported rise in employment in Scotland, while unemployment has fallen for the first time in a year."Scotland's youth unemployment rate is lower than the UK, and our youth employment rate is higher than the UK.
"There is no room for complacency and we must continue to bring unemployment down."
35% of young people in Scotland suffer from insomnia.
18% have self-harmed.
22% feel depressed all or most of the time.
33% say they lack a sense of identity.
20% feel they lack a sense of belonging.