It is common to see increasing returns to human capital in a well-functioning labour market (Acemoglu, 2002). Although the trend to rapid economic growth could enlarge the income gaps between well-educated and less well-educated workers, policies cannot be proposed to stop that trend. Returns to human capital explain about one-seventh of total income inequality among urban households in both years, and is the largest contributor to income inequality in 2001 and the third-largest in 2005 (Table 3.8). The best policy here should be to equalise the opportunities for human capital accumulation, rather than to undermine returns to human capital. On the one hand, the unemployed and those laid off can find work and earn money in the informal sector. This employment effect could reduce overall income inequality by increasing the incomes of low-income groups.