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The worker/wrapper transformation is a general technique for improving the performance of recursive programs by changing their types. The previous formalisation (Gill & Hutton, 2009) was based upon a simple fixed point semantics of recursion. In this article we develop a more structured approach, based upon initial algebra semantics. In particular, we show how the worker/wrapper transformation can be applied to programs defined using the structured pattern of recursion captured by fold operators, and illustrate our new technique with a number of examples.