Why Slums Persist

Slums persist not because they are desirable, but because they are necessary. The task for policymakers is not to eliminate slums by diktat, but rather to make them obsolete over time by promoting the educational opportunities and spatial integration their residents need.

SÃO PAULO—The standard policy response to slums—relocate people, bulldoze the settlement, and build public housing elsewhere—is older than the slums themselves. It has never worked.

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The logic seems straightforward. Slums are viewed as unsanitary, unsafe, and visually jarring. If you want to build a modern, orderly city, you should remove them. But people do not live in slums by choice. They do so because there are no affordable alternatives near their jobs and essential services. Destroying their homes without addressing the conditions that drove them there merely shifts the problem to a different—often worse—place.

Experience bears this out. In 1968–75, Brazil’s military government launched an aggressive slum-demolition campaign in Rio de Janeiro, forcing nearly 50,000 families into housing projects on the city’s periphery. The residents of Catacumba favela, which housed nearly 15,000 people on prime real estate in Lagoa before its destruction in 1970, experienced a decline in household income, higher commuting costs, and reduced access to jobs following their relocation. Meanwhile, the overall favela population continued to grow.

A similar pattern has been documented in Addis Ababa, Lagos, and Mumbai, with slums eliminated in one place merely reappearing elsewhere, often nearby. Even when eradication was abandoned as an official policy, as in Brazil, new informal settlements kept emerging.

In new research, I and my co-authors, Pedro Cavalcanti and Alexander Monge-Naranjo, examine the emergence and persistence of slums in Brazil using detailed data on labor markets, housing, and education. We find that slums are not simple poverty traps; under the right conditions, they can also be stepping stones.

For families with very low levels of education, slums can provide an entry point into urban economic life. Compared to rural areas, they offer better access to jobs and schools. But the quality of those schools remains poor, so as households accumulate education, the slum becomes a constraint. Put simply, slums can help households get onto the first rungs of the economic ladder but prevent them from climbing higher.

While some households manage to improve their economic circumstances enough to leave the slums, many—often those with intermediate levels of education—do not. And there are always more low-educated rural households moving in, often motivated by the desire to improve their children’s educational prospects. In fact, our research shows that schooling plays a key role in slum formation: households with low years of schooling want their children to have better lives, but cannot afford to live in cities.

These findings help to explain why slums persist despite the economic opportunities they provide. They are not static communities. Slums are dynamic systems that are continuously renewed. Instead of attempting to eliminate slums through demolition and forced relocation—a recipe for failure—policymakers should address the deeper mismatches between job proximity, housing affordability, and access to quality education.

To this end, improving schools within slums is essential, though it might attract new migrants, causing slums to grow. Countries at earlier stages of development—when most people live in rural areas—should thus place a high priority on improving rural schools, so that migration to cities reflects opportunity, rather than desperation. Better-prepared migrants are more likely to enter formal housing markets rather than informal settlements.

As urbanization progresses, the emphasis must shift to integrating slum residents into the formal economy, especially by getting their children into higher-quality schools. Such policies must be sustained across generations to enable households to build up enough human capital to sustain upward mobility and break the cycle of informality.

But education is just the first step. If formal urban housing remains prohibitively expensive, even upwardly mobile families will struggle to leave slums behind. Because the market does not supply affordable housing where it is needed, and long daily commutes are unrealistic, governments must intervene with a coherent strategy that accounts for both education and housing.

Slums persist not because they are desirable, but because they are necessary. As long as people lack better options, they will continue to flourish. The task for policymakers is not to eliminate slums by diktat, but to make them obsolete over time by promoting the educational opportunities and spatial integration their residents need.

This commentary is published in collaboration with the International Economic Association’s Women in Leadership in Economics Initiative, which aims to enhance the role of women in economics through research, building partnerships, and amplifying voices.