Developing countries have large, complex informal sectors. Informality provides workers and firms with flexibility at the cost of security, often leaving individuals worse off in the long-term. What have we learned from research on informality, and how can we use it to inform policy?

Slum upgrading programmes improve living conditions for low-skilled residents, but potentially at the cost of formal development and inefficient land allocation. Evidence from Indonesia reveals that these costs are largest close to the city centre, s...