Australia has slipped in a global child welfare ranking report which shows a poor record on the environment and deterioration in education and employment standards.

The second Child Prosperity Index by international aid agency Save The Children rates the world's top 20 economies on the health and welfare of young people.

Australia's economic prosperity is not shared by all children. Credit:Erin Jonasson

Australia dropped from third place in 2014 to fourth this year, with the research identifying inaction on reducing carbon emissions and disparity in education across the country.

Germany was ranked first, followed by France and Japan in the report which rates health, education, gender equality, income, safety, employment, infrastructure and environment.