Changes in Child Poverty in the OECD/EU During the Great Recession

This note describes the evolution of child poverty in 41 OECD and/or European Union (EU) countries during the Great Recession (GR).Though not a measure of direct child well-being, the strong association between child development and household income makes income poverty a useful indicator of the trajectory of child well-being both in the short- and medium-term. In 2012 there were around 76.5 million children living in poverty in the 41 OECD countries studied here. During the period 2008-2012 child poverty rates increased in 23 of the 41 OECD countries for which we have comparable data; in total, approximately 6.6 million children became poor and 4 million left poverty for a net increase of 2.6 million. Five countries at the bottom of our Child Poverty League Table had child poverty increases that were over 10pp. However, due to their relative size and despite only modest increases in child poverty rates, Mexico and the United States are home to over half of the newly poor children during this period with 2 and 1.7 million respectively. The correlation between child poverty changes and GDP changes is high, with a simple regression implying that a GDP per capita level in 2011 that was 95% of the level in 2007 is associated with a 4.4 pp increase in the child poverty rate. While this bivariate relationship does not imply causality, the strength of the relationship is striking and illustrates the susceptibility of families with children to overall macroeconomic conditions, whatever the causal mechanism underlying the relationship. A League Table of the 50 US states, home to over a third of all children in the OECD shows that child poverty has increased in 34 out of 51 states (50, plus Washington DC) and that also among US states changes in child poverty are strongly correlated with changes in the business cycle. A combined League Table of the 51 US states and the OECD countries illustrates the large heterogeneity in the US; while as a whole it is in the middle of the country Table, three states actually fall into the top ten (Mississippi, North Dakota, West Virginia) best performers and several others fall into the bottom 10 of worst performers.