We study the interplay between informality, health, and education in South Africa. Using data from the National Income Dynamics Study, we document large disparities in health and labor market outcomes over the life cycle. We develop and estimate a life-cycle search-and-matching model with endogenous education and a dual labor market. We show that informal employment and poor health reinforce each other, generating a persistent poverty and poor-health trap. Policy experiments show that the optimal reform combines tertiary education subsidies, a broader tax base, and a lower average tax burden on earnings, increasing employment, welfare, and health while preserving fiscal balance.