case where theta is equal to 0.5 and alpha is equal to 1, which corresponds to the “square root scale” recently used by the OECD.<sup>13</sup> In total, we consider 32 unique values of alpha and theta that are tested, with results shown in Table 13.

The pivot household contains six people, three adults and three children. This corresponds to the median number of adults and children in households with welfare between $1.70 and $2.10 per day in the sample. In each of the 32 scenarios, the poverty line of $1.90 is multiplied by the ratio of household size to the number of equivalent adults, for the pivot household. For example, the equivalent household size for a household with three adults and three children is 5.4 when alpha=0.8 and theta=1, as shown in row 2 of Table 15. Multiplying $1.90 by 6 and dividing by 4.6 gives an effective poverty line for that equivalence scale of 2.1 which is then used to re-estimate child and adult headcount poverty rates.

The results of this sensitivity test confirm that children have higher poverty rates under every twoparameter equivalence assumption, apart from those estimated at the extreme assumption that children have no monetary welfare requirements, equivalent to an α parameter equal to zero. The estimated poverty rates, however, are always much greater than the very low headcount rates of between 6 and 3 percent reported by Batana et al (2013) who assume a pivot household of one adult. By adjusting poverty lines and reflecting indicative household composition at the margins of poverty, we find a lower bound child poverty headcount rate of between 17.2 to 20.9 percent across all values of alpha and theta of 0.2 or more. This lower bound of 0.2 is far lower than any commonly used equivalence scale and lower than any of the scales used by Batana et al (2013). Poverty rates using the “square root scale” of theta and alpha equal to 0.5 and 1, respectively, are 11.6 percent for adults and 18.6 percent for children. We therefore conclude that higher extreme child poverty rates are robust to any sensible two-parameter equivalence scale.

# **5. Conclusion**

This paper presents new evidence on child poverty and its sensitivity to alternative adult-equivalence scales. The analysis is based on a data set of 89 countries taken from the Global Micro Database, a new database that adds harmonized household characteristics to the same surveys and welfare aggregates that are used to calculate official World Bank poverty estimates. The results confirm that children are disproportionately poor. The poverty rate among children in the sample aged 0 to 17 is estimated to be 19.5 percent, which is over twice the 9.2 percent rate for adults 18 and above. The estimated global poverty rate for 0 to 4 and 5 to 9 year olds is 21 and 21.5 percent, respectively, and declines for each successively for older age group. Furthermore, an estimated 44.5 percent of children live on less than $3.10 per day, as opposed to 26.6 percent of adults.

> the household (the consumption of one member prevents the consumption of another of the same good), while θ=0 would imply that all goods consumed by the household are public goods.

> 13See: <u>http://www.oecd.org/els/soc/CO_2_2_Child_Poverty.pdf</u>

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