The rural economic crisis caused by a lack of slave labor led to high levels of migration from agricultural regions to the then capital - Immigrants from all over the country, and even from Europe, flocked to Rio during this early stage of industrialization, largely encouraged by false rumors about urban labor supply.  

At the same time, urban reforms led to the demolition of a lot of existing low-income housing, as well as collective housing facilities, which were seen as unhealthy and disease incubators - The city found itself in a difficult position, with huge swathes of homeless and unemployed ex-slaves and migrants.

while it is commonly thought that the first favelas only began to emerge in Rio de Janeiro at the end of the 19th Century, in reality, a preoccupation with unhealthy, unregulated, and improvised urban housing settlements existed since the early decades of the century.