Lin Tian

I am an Assistant Professor of Economics at INSEAD and a CEPR research affiliate. My research interests include International Trade, Economic Geography and Urban Economics.
Apart from doing research, I partake in marathons and scuba diving.

 

Research

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

Published and Forthcoming Papers

AbstractIn this paper, we study how occupation (or industry) tradability shapes local labor- market adjustment to immigration. Theoretically, we derive a simple condition under which the arrival of foreign-born labor into a region 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—consistent with our theory—that 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 across 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, thereby confirming our model’s theoretical mechanism. We then use the model to explore the quantitative consequences of counterfactual changes in U.S. immigration on real wages at the occupation and region level.
  • “Hits from the Bong: The Impact of Recreational Marijuana Dispensaries on Property Values”
    with Danna Thomas
    (paper)
    Regional Science and Urban Economics, February 2021
AbstractWe exploit a natural experiment in Washington state that randomly allocates recreational marijuana retail licenses to estimate the capitalization effects of dispensaries into property sale prices. Developing a new cross-validation procedure to define the treatment radius, we estimate difference-in-differences, triple difference, and instrumental variables models. We find statistically significant negative effects of recreational marijuana dispensaries on housing values that are relatively localized: home prices within a 0.36 mile area around a new dispensary fall by 3-4% on average, relative to control areas. We also explore increased crime near dispensaries as a possible mechanism driving depressed home prices. While we find no evidence of a general increase in crime in Seattle, WA, there is a significant increase in nuisance-related crimes in census tracts with marijuana dispensaries relative to other census tracts in Seattle.

Working Papers

  • “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”]
AbstractFirms 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.
AbstractAre firms sophisticated maximizers, or do they consistently make errors? Using transaction-level data from Ugandan value-added tax returns, we show that sellers and buyers report different amounts 79 percent of the time, despite invoices being easily cross-checked. We estimate that 27 percent of firms are disadvantageous misreporters—they misreport own sales and purchases such that their tax liability increases—while 73 percent are advantageous misreporters. Many firms—especially disadvantageous misreporters—fail to (or under-) report transactions they themselves reported at customs, increasing their VAT liability. Unilateral VAT misreporting cost Uganda about USD 383 million in foregone 2013-2016 tax revenue.
  • “Geographic Fragmentation in a Knowledge Economy”
    with Yang Jiao
    (New Draft!)
    (paper)
AbstractWe 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.

Selected Work-In-Progress

 

Teaching

I teach (taught) the following courses

INSEAD

  • Prices and Markets (MBA)

Columbia University

  • International Trade (Undergraduate)
 

Contact

1 Ayer Rajah Ave, Singapore 138676
INSEAD

lin.tian [at] insead.edu