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Slums, a pervasive urban phenomenon in developing economies, can increase civic participation while paradoxically lowering certain forms of political efficacy, as citizens participate in collective public goods rather than state-provided public goods. I propose a theory stipulating that informal housing leads to a narrow sense of collective efficacy as community residents are compelled to take collective actions to create alternatives in the absence of public goods such as property rights and municipal basic services. Though this leads to higher social capital within the community, it reduces everyday citizen-bureaucrat interactions and lowers expectations of official public goods in the long run. Thus, the underdevelopment of mass urban housing market creates a paradoxical social environment that demotivates the urban lower middle classes from demanding better accountability around urban public goods provision. I motivate my question by showing negative correlations between community association participation and political efficacy across the developing regions in barometer surveys. I then use the Indonesian Family Life Survey (IFLS), a household survey tracking around 10,000 households over two decades, and leverage household life events – migration and marriage – as quasi-experiment to show that residential informality indeed shapes community and political participation.