· Lin Tian ·

Research

My primary fields are International Trade and Economic Geography. My secondary fields are Urban Economics and Public Economics.

Working Papers

“Tradability and the Labor-Market Impact of Immigration: Theory and Evidence from the U.S.”
with Ariel Burstein, Gordon Hanson, and Jonathan Vogel
(paper | slides | NBER working paper)
Revised and Resubmitted to Econometrica

Abstract

In this paper, we show that labor-market adjustment to immigration differs across tradable and nontradable occupations. Theoretically, we derive a simple condition under which the arrival of foreign-born labor crowds native-born workers out of (or into) immigrant-intensive jobs, thus lowering (or raising) relative wages in these occupations, and explain why this process differs within tradable versus within nontradable activities. Using data for U.S. commuting zones over the period 1980 to 2012, we find that consistent with our theory, a local influx of immigrants crowds out employment of native-born workers in more relative to less immigrant-intensive nontradable jobs, but has no such effect within tradable occupations. Further analysis of occupation labor payments is consistent with adjustment to immigration within tradables occurring more through changes in output (versus changes in prices) when compared to adjustment within nontradables, thus confirming our model’s theoretical mechanism. Our empirical results are robust to alternative specifications, including using industry rather than occupation variation. We then build on these insights to construct a quantitative framework to evaluate the consequences of counterfactual changes in U.S. immigration.

“Division of Labor and Productivity Advantage of Cities: Theory and Evidence from Brazil”
(paper)
Best paper (second place) at Urban Economics Association Annual Conference, 2018 (for recent graduates and current students)
[Previously titled: “Division of Labor and Extent of Market: Theory and Evidence from Brazil”]

Abstract

Firms are more productive in larger cities. This paper investigates a potential explanation that was first proposed by Adam Smith: Larger cities facilitate greater division of labor within firms. Using a dataset of Brazilian firms, I first document that division of labor is indeed robustly correlated with city size, controlling for firm size. To quantify the importance of division of labor in explaining productivity advantages of cities, I propose and estimate a quantitative model that embeds a theory of firms' choice of the optimal division of labor in a spatial equilibrium framework. In the model, the observed correlation between firm's division of labor and city size is generated by both a selection effect—firms endogenously sort across space, choosing different extents of division of labor—and a treatment effect—larger cities increase division of labor for all firms, by reducing the costs associated with greater division of labor. Exploiting a quasi-experiment that changes the cost of division of labor within cities—the gradual roll-out of broadband internet infrastructure—I validate key model assumptions and and structurally estimate model parameters. Through a counterfactual analysis, I estimate that division of labor contributes to 15% of the productivity advantages of larger cities in Brazil, half of which is due to firm sorting and the other half to the treatment effect of larger city size.

“Strategic or Confused Firms? Evidence from “Missing” Transactions in Uganda”,
with Miguel Almunia, Jonas Hjort and Justine Knebelmann
(paper)

Abstract

Are firms sophisticated maximizers, or do they consistently make errors? We study this question in Uganda. We show that sellers and buyers report different amounts in 79 percent of transactions subject to value-added tax (VAT), despite invoices being easily comparable. We estimate that 29 percent of firms misreport own sales and purchases such that their liability
increases. However, 71 percent are self-advantageous misreporters. Only such firms misreport less when exposed to tighter enforcement (at customs, where exchange rate-variation-induced imports pass through). Despite the gain from firm errors, overall, unilateral VAT misreporting cost Uganda USD 446 million in revenue from 2013-2016.

“Geographic Fragmentation in a Knowledge Economy”
with Yang Jiao
(New Draft!)
(paper)

Abstract

We investigate the role of information and communications technology (ICT) in shaping the spatial distribution of skills in the US, through the lens of cross-city joint production (e.g., sourcing, headquarter-subsidiary relation). Motivated by the stylized facts that big cities had become disproportionately more skill-intensive over the period of 1980 to 2013, and industries that are more likely to fragment had seen a larger increase in spatial skill dispersion during the same period, we propose a quantifiable spatial equilibrium model with fragmented cross-city production and heterogeneous skills. The model echoes that a nationwide communications cost reduction, through improvement in ICT, leads to skill reallocation into big cities due to the increase in cross-city joint productions. Consistent with model predictions, we find empirically—using a novel instrumentation strategy—that local Internet quality improvement in large cities leads to skill inflows; while in small cities, it leads to skill outflows. Our quantitative evaluation of the model shows that the improvement in Internet infrastructure accounts for a significant share of the spatial redistribution of skills across US cities.

“Hits from the Bong: The Impact of Recreational Marijuana Dispensaries on Property Values”
with Danna Thomas
(paper)

Abstract

This paper studies the impact of local disamenities on property values, by focusing on the legalization of recreational marijuana dispensaries in Washington State. Policymakers have long expressed concerns that the positive effects of the legalization—e.g., increases in tax revenue—are well spread spatially, but the negative effects are highly localized. We use changes in property values to measure individuals' willingness to pay to avoid the local negative externalities caused by the arrival of marijuana dispensaries. Our key identification strategy is to compare changes in housing sales around winners and losers in a lottery for recreational marijuana retail licenses; due to location restrictions, license applicants were required to provide an address of where they would like to locate. Hence, we have the locations of both actual entrants and potential entrants, which provide a natural difference-in-differences set-up. Based on our preliminary analysis using data from King County, Washington, we find a 1.7% decrease in the value of properties within a 0.5 mile radius of an entrant (or a $6,700 decline in property values).

Selected Work-In-Progress

“Information, Fiscal Capacity and Tax Compliance: An Experimental Evaluation”
with Miguel Almunia, Jonas Hjort and Justine Knebelmann
(Ongoing RCT)
“Weeding out the Competition: Spatial Competition and Firm Decision”
with Danna Thomas

Lin Tian

Research

Working Papers

Selected Work-In-Progress

Teaching

INSEAD

Columbia University

Columbia University

Carnegie Mellon University

Contact