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

AbstractAre firms sophisticated maximizers, or do they consistently make errors? Using transaction-level data from Ugandan value-added tax (VAT) returns, we show that sellers and buyers report different amounts 79% of the time, despite invoices being easily cross-checked. We estimate that 25% of firms are disadvantageous misreporters—they systematically misreport own sales and purchases such that their tax liability increases—while 75% are advantageous misreporters. Many firms—especially disadvantageous misreporters—fail to report imported inputs they themselves reported at Customs, increasing their VAT liability. On net, unilateral VAT misreporting cost Uganda about US$384 million in foregone 2013-2016 tax revenue.
  • “Hits from the Bong: The Impact of Recreational Marijuana Dispensaries on Property Values”, with Danna Thomas
    Regional Science and Urban Economics, February 2021
    (paper)
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.
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.

Working Papers

  • “Division of Labor and Productivity Advantage of Cities: Theory and Evidence from Brazil”
    (paper | CEPR discussion 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 positive 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, possibly by reducing costs associated with greater division of labor. Structural estimates derived from the model show that division of labor accounts for 17% of the productivity advantage 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. The theory also generates a set of auxiliary predictions of firms’ responses to an exogenous shock to division of labor. Exploiting a quasi-experiment—the gradual roll-out of broadband internet infrastructure—I find causal empirical support for these predictions. Finally, the quasi-experiment also provides out-of-sample validation for the structural estimation: The model is successful in predicting the heterogeneous impacts of the new infrastructure across Brazilian cities.
  • “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.
  • “The Economic Impact of Internet Connectivity in Developing Countries (an overview of evidence)”, with Jonas Hjort
    (paper)
AbstractFirms, workers, and consumers in developing countries are increasingly connected to each other and the rest of the world through the internet. Can this connectivity transform poor economies, as techno-optimists hope, or are there more deeply rooted barriers to economic development? Research on the topic is growing rapidly. In this article we provide an overview of existing evidence on the extent to which, and how, internet connectivity affects economic development. Not surprisingly, estimates vary widely with the context, particular outcome, and form of internet studied. Overall the literature points towards sizeable economic impacts in many—though not all—settings.

Selected Work-In-Progress

  • “Geographic Spillovers and Firm Exports: Evidence from China”
    with Yue Yu
    (Draft Coming Soon!)
AbstractThis paper empirically investigates the importance of geographic spillovers on a firm’s export activities. We leverage a quasi-experiment—China’s high-speed rail (HSR) expansion—that dramatically reduces traveling time between connected cities and provides plausibly exogenous variation in access to surrounding export activities for Chinese firms. We find that with the HSR opening, the geographical spillovers from connected cities increase a firm’s export revenue, the number of export countries, the frequency to update its product varieties, and an overall expansion of its product menu. The empirical findings are consistent with a heterogeneous firm model that allows geographic proximity to other export activities to affect the costs of accessing foreign markets. Additionally, we demonstrate that the geographic spillover effects are heterogeneous along dimensions such as firm size, product complexity, and firm location.
 

Teaching

I teach (taught) the following courses

INSEAD

  • Prices and Markets (MBA), Econometrics A (PhD)

Columbia University

  • International Trade (Undergraduate)
 

Contact

1 Ayer Rajah Ave, Singapore 138676
INSEAD

lin.tian [at] insead.edu