Second, rampant labour market informality often implies lower income, no social protection, little opportunity to develop human capital, and thus risks perpetuating poverty. Yet, a higher degree of informality does not necessarily imply higher inequality.19 Over the past decade, inequality decreased in Brazil, but recent research attributes this decline to better education rather than to the concomitant drop in labour market informality (Arnal and Forster, 2011). Also for China, informality affects income dispersion only slightly with differences in human capital and the rural-urban divide playing a more important role (Cai et al.,