WASHINGTON, February 12, 2026 – Children born today in low- and middle-income countries are projected to lose more than half of their potential lifetime earnings due to persistent deficits in nutrition, learning, and workplace skills, according to a new report released Thursday by the World Bank Group.
The report finds that current shortfalls in health, education, and skills development are costing these countries an estimated 51 percent of future labor earnings. Despite rising incomes and declining poverty rates over the past 15 years, two-thirds of low- and middle-income nations have experienced setbacks in nutrition, learning outcomes, or workforce skills.
Titled Building Human Capital Where It Matters: Homes, Neighborhoods and Workplaces, the report reveals that 86 of 129 low- and middle-income countries recorded declines in at least one of those key areas between 2010 and 2025.
Expanded Human Capital Index Launched
Alongside the report, the World Bank introduced an expanded global measurement tool — the Human Capital Index Plus (HCI+) — which tracks human capital accumulation from birth to age 65. For the first time, the index measures how gains or losses in the labor market affect lifetime productivity and translates human capital gaps into projected losses in future earnings.
The data show that countries with similar income levels often perform very differently on human capital development, indicating that financial resources alone are not the main constraint.
High-performing countries relative to their income levels include Jamaica, Kenya, Kyrgyz Republic, and Vietnam.
However, the index also highlights significant gender disparities. When calculated for women only, the HCI+ score is 20 points lower than for men, largely due to lower female labor force participation and limited access to quality jobs.
Homes, Neighborhoods, and Workplaces Matter
The report emphasizes that human capital development is shaped not only by schools and hospitals but also by conditions in homes, neighborhoods, and workplaces.
Homes:
Skill gaps tied to family circumstances emerge before the age of five — often before children begin formal schooling — and persist into adolescence. Income alone does not compensate for poor caregiving environments, which are associated with lower test scores and higher rates of depression. The report also notes high rates of violent discipline in homes, signaling the need for improved caregiving practices.
Neighborhoods:
Children raised in wealthier neighborhoods earn twice as much as those from poorer communities, even when their parents have similar income and education levels. Factors such as pollution, crime, and weak infrastructure directly affect health and learning outcomes.
Workplaces:
In many developing countries, self-employed workers earn only half as much per additional year of experience as wage workers. Yet about 70 percent of workers are engaged in small-scale agriculture, microenterprises, or low-quality self-employment — jobs that often lack formal training and structured learning opportunities. Around half of women are out of the labor force, while about 20 percent of young people are neither studying nor working, limiting opportunities for skill accumulation.
Call for Broader Investment
Mamta Murthi, Vice President for People at the World Bank Group, warned that many countries are struggling to improve nutrition, learning, and workforce skills, raising concerns about future productivity and job quality.
“The prosperity of low- and middle-income countries depends on their ability to build and protect human capital,” Murthi said, calling for broader investments in homes, neighborhoods, and workplaces to strengthen lifelong skill development.
Norbert Schady, the World Bank’s Chief Economist for People, said policies must address the specific drivers of human capital in each setting.
“By enabling more people to build skills throughout life, countries can spark a virtuous cycle where rising productivity leads to higher wages and greater incentives for families and communities to invest in the next generation,” Schady noted.
Key Recommendations
The report recommends:
• Expanding parenting and preschool programs to improve early learning and caregiving environments.
• Targeting struggling neighborhoods with coordinated government interventions focused on nutrition, learning, and job skills.
• Reforming labor markets to expand apprenticeships, childcare services, and on-the-job training.
• Integrating public services across homes, neighborhoods, and workplaces, supported by improved data systems to track progress.
The World Bank warns that without urgent and coordinated reforms, millions of children born today risk entering adulthood with diminished productivity — a trend that could undermine economic growth for decades to come.
