Measuring Informality

This paper suggests that informality in Latin America is falling—that is, getting better—but not in all places and at the same rates of change. Apparently, there is a built-in inertia in the system, with cities that have improved most in the past continuing to do so in the present, whereas low-performance cities seem to be trapped in a bad equilibrium state. The improvements seem to result from deliberate/organized intervention, suggesting that public policy not only matters but, most importantly, also depends on local political will rather than a generalized process affecting all cities in the same manner. Changes in urban poverty do not seem to be a determining factor in explaining changes in informality attributes. Different combinations of attributes usually describe informal settlements. The paper shows that the effectiveness of policies addressing a given attribute vary considerably, even within the same country. Further research is needed to explain the causes of such variance.