Does aggregation hide the harmful effects of inequality on growth?

Aggregation can severely bias conventional tests of whether inequality impedes growth. A micro growth model estimated on farm-household data for rural China indicates that asset inequality in the area of residence has a harmful external effect on consumption growth. The effect is lost in a regional growth regression.Aggregation can severely bias conventional tests of whether inequality impedes growth. A micro growth model estimated on farm-household data for rural China indicates that asset inequality in the area of residence has a harmful external effect on consumption growth. The effect is lost in a regional growth regression.