Investing in children is one of the best investments a government can make. What happens in childhood shapes a person’s health, education, job prospects and well-being for the rest of their life. It matters for our economies too. When children grow up in poverty or miss out on opportunities, they are less likely to reach their full potential as adults. That holds back productivity and pushes up demands on public budgets later on. Giving every child a fair start is also how we build societies where success depends on talent and effort, not on the circumstances a child is born into.
Governments across the Organisation for Economic Co‑operation and Development (OECD) face growing pressure on their finances. Populations are ageing. Economic growth has slowed. Public money needs to work harder. Fewer children are being born, too: the number of children under 18 in OECD countries is projected to fall from around 283 million in 2025 to about 250 million by 2050. That creates a real opportunity to invest more in each child – but only if children stay a priority in public budgets. That is why making social spending work better for children has never been more important.
Spending Better for Children through Social Policies looks beyond how much countries spend. It asks a more useful question: how can the way we spend deliver better results for children – and ease the pressure on public finances in the years ahead?
The starting point is clear. Public social spending across OECD countries has risen from around 20% of gross domestic product (GDP) in the early 2000s to 25% in the 2020s. But children have not been the main beneficiaries. Spending on families with children has stayed below 10% of total social spending. Most of the increase has gone to health and old-age support.
Meanwhile, too many children are being left behind. In 2023, one in eight children across the OECD lived in income poverty. In 2024, around one in seven children in OECD European countries experienced severe material and social deprivation – and most of them live in families above the poverty line. Learning outcomes are slipping: the share of 15‑year‑olds performing below baseline proficiency in the OECD Programme for International Student Assessment (PISA) rose from 31% in 2009 to 43% in 2025. More than one in five adolescents say their health is fair or poor.
So how do we make social spending work better for children?
The report’s central finding is simple. Spending more can help. Spending better helps far more. If social spending keeps growing at its historical pace, child poverty could fall by around 1.5 percentage points (p.p.) over the next decade, and material deprivation by 4.2 p.p. Those are welcome gains. But much larger gains are within reach if new resources go to the policies that deliver the most for children. No single policy does the job on its own. The strongest results come from a coherent mix of three things: helping parents into work, adequate income support, and accessible, high-quality services.
First, early childhood education and care (ECEC). Putting extra resources into ECEC and making sure children take part – especially children from disadvantaged families – makes a big difference. If an additional p.p. of social spending went to ECEC, alongside higher enrolment, the poverty-reducing impact of social spending could rise by around 50% over the next decade. Learning improves as well: the share of low performers in PISA could fall by around 4% from 2025 levels. Yet today, participation among children under three remains highly unequal across income groups, which limits what these systems can deliver. This is what spending better means in practice. It is not just about funding high-quality services. It is about making sure the children who would benefit most can actually use them.
Second, helping parents into work. Work is the most reliable route out of poverty and the surest path to independence for families. An additional p.p. of social spending devoted to active labour market programmes – the support that helps people find and keep jobs – could lift the impact of social spending on child poverty by 24%, and on severe material deprivation by 9%. It would also slow the growth of social spending by around 1% over the next decade. Combined with affordable childcare and income support that makes work pay, these policies help families stand on their own feet and give children a lasting way out of poverty.
Third, adequate income support. Directing a larger share of social spending to family cash benefits could raise the impact of social spending on relative child poverty by around 27%. Support works best when it is stable and predictable, and when it reaches the families that need it most. But cash alone is not enough. Relying on cash transfers on their own does less to reduce severe material deprivation and can add to long-term spending pressures. Poor housing, unmet healthcare needs and limited access to essential services can hold children back whatever the family income. Income support needs to be matched by accessible, high-quality services. Preventive healthcare stands out: shifting one p.p. of social spending to it is associated with a 24% rise in the share of adolescents reporting excellent health, without adding to long-term spending pressures.
One more lesson matters. Support for children cannot stop after the early years. The first years of life are critical for preventing disadvantage. But children also need sustained support through middle childhood and adolescence to do well at school, stay healthy and move up in life. That is what equality of opportunity requires. Value for money is not about choosing one policy over another. It is about getting the mix right – and keeping support in place as children grow.
The report also shows that improving children’s lives and keeping public finances sustainable are not competing goals. Well-designed policies can achieve both. Supporting parents into work, investing in early childhood education and care, providing adequate income support and ensuring access to quality services all improve children’s lives today. They also prevent more costly disadvantage tomorrow.
The OECD will build on this evidence as we support governments to strengthen policies for children across sectors and throughout childhood, including through the draft OECD Recommendation on Child Well-Being and Policy Action for Children. This report makes an important contribution to that agenda. It shows not only why investing in children matters, but how governments can make every investment count – so that every child has the best possible chance to lead a successful life.
Mathias Cormann,
OECD Secretary-General