This study examines the impact of poverty on human capital development using DHS data from Yemen and Egypt. Our findings show that children from poor households are less likely to attend school and if they attend, they are more likely to drop out and engage in child labor. With regards to health, children from poor households are more likely to be undernourished, more susceptible to disease incidence and less likely to receive medical treatment and immunization. In general girls are more disadvantaged than boys, particularly in poor households. Human capital development in terms of education and health of children is generally worse in Yemen than in Egypt.