Finding employment in the formal sector in developing countries is difficult. Countries with an abundance of informal firms suffer from low aggregate productivity. This column suggests that as countries develop, more workers transition from the informal to the formal sector. A ten-year period of rapid growth in Vietnam displayed a decrease in the employment in the informal sector in favour of the formal one. Most of it was due to changing cohorts in the workforce. In addition, this transition leads to gains in aggregate productivity in the formalised sectors.