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Informality comprises both the informal sector and informal employment. Although its longevity has been established, its cyclical effect has rarely been identified. The original dualistic theory covers both the demise and the persistence of informality. This persistence results from a segmentation of the labor market that manifests itself in income gaps despite the mobility of workers. The impact of formalization policies is moderate and appears more significant for the regulation of businesses than for the extension of the social protection of workers.