The International Child Poverty Gap: Does Demography Matter?

Children experience a higher poverty rate in the U.S. than in most comparable nations a poverty gap traceable to international differences in income redistribution across households rather than to market earnings. Using Luxembourg Income Study data, we find that child poverty rates are higher in the U.S. than in 13 out of 14 other high-income nations. The poverty rate for American children living with a single female and no other adult (55%) is the highest for any family structures in any nation. Using demographic decomposition, we isolate the contributions of several factors to the overall gap, including family-formation behaviors and living-arrangement decisions that place children in family structures with differential poverty risks (distributional effect), and differences in market earnings and transfer income between households headed by a married couple and other households with children (gradient effects). Distributional effects contribute to the U.S. poverty gap with every nation except the United Kingdom but are relatively small. Gradient effects in income redistribution are also of limited importance, and contribute to the U.S. gap with only some countries. These results demonstrate that overall differences in labor markets and welfare schemes best explain international child poverty gaps.