The Prince's Trust is warning that young people whose parents do not work are much less likely to find a job.
The charity found one in five in Wales felt their parents did not have the knowledge to help them find work.
The children told them they felt talentless and often expected to follow in their parents into unemployment.
The Welsh Assembly Government said: "We are determined to help young people from all backgrounds gain the skills and aptitude required for success."
More than 2,000 16-to-24-year-olds across the UK were interviewed for the report, Destined for the dole?, with 196 of them from Wales.
It found that one in six (16%) of those in Wales expected to end up on benefits because other people around them have.
More than one in four (29%) said they were anxious about finding work after seeing their parents out of work.
Although the research found real concerns about finding work, more than three quarters said getting a good job was the best way to improve their future.
Prince's Trust Cymru director, Rick Libbey, said: "Too many young people in Wales are facing a cycle of worklessness and can't see a way out.
"It is a tragedy to think that so many feel condemned to a life on benefits.
"Only by giving young people skills, confidence and positive role models can we help them break out of this unemployment trap.
"If we fail to stop these disadvantaged young people becoming disadvantaged adults, this cycle will continue to blight these families for generations to come."
The Welsh Assembly Government said: "Our new policy, Economic Renewal, emphasises our commitment to support young people to succeed and be ready for the world of work.
"This aim is being delivered by a range of initiatives, including a commitment to high quality apprenticeships and engaging young people in the STEM subjects - science, technology, engineering and mathematics.
"We have also invested European funding in the Prince's Trust Cymru Business Programme which will help young people to see self employment as a viable option, equipping them with the skills and the motivation to drive forward their ventures and create new job opportunities in their own local communities. "