Lin Tian

I am an Assistant Professor of Economics at INSEAD and a CEPR Research Fellow in International Trade and Regional Economics.
As a trade economist, I study how workers and firms adjust to disruption — trade shocks, new technology, migration — and why some adjust far more easily than others. The answer usually turns on what a worker is specialized in, or on what a firm knows.
Away from research, I run marathons and scuba dive.

 

Research

Published and Accepted Papers

AbstractWe study how labor markets adjust to disruptions through the field-of-study choices of new cohorts. We develop a dynamic general-equilibrium model in which forward-looking students choose a field at college entry and later switch occupations, and estimate it on Danish administrative data. Fields differ in the comparative advantage and switching costs they give workers, and ignoring field choice understates the elasticity of occupational switching by a factor of 6.7. We then study a trade war and an AI shock to skills. Field choice matters when a shock changes relative field values. The trade war leaves these values unchanged, so field choice barely responds. The AI shock moves them apart, and re-choosing fields nearly doubles the lifetime income gain, by 1.36 percentage points. Policies that enhance flexibility in field choice raise lifetime income by 4.46 percentage points. This value barely changes under the trade war but falls under AI.
  • “The Economic Impact of Internet Connectivity in Developing Countries (an overview of evidence)”, with Jonas Hjort
    (paper | CEPR discussion paper)
    Annual Review of Economics, August 2025
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 technology-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 from 153 studies 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.
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

  • “Geographic Integration and Firm Exports: Evidence from China”
    with Yue Yu
    Conditionally accepted at the Journal of the European Economic Association
    (paper | CEPR discussion paper)
AbstractThis paper examines a new mechanism through which transportation infrastructure, designed exclusively to enhance geographic integration of domestic markets, affects a country's export performance. By leveraging the expansion of China’s high-speed rail (HSR) as a quasi-natural experiment, we provide robust evidence that the enhanced within-sector integration resulting from this infrastructure development significantly boosts firms' export performance. This impact is observed through increased export sales and volume, expanded market reach, and improved product quality. Our findings are consistent with the notion that HSR connections facilitate knowledge spillovers among exporters, which aids them in overcoming information barriers and thereby improving foreign market access. Importantly, we address potential confounding factors and demonstrate that the findings remain robust when accounting for alternative channels such as supplier and customer access and labor market pooling effects. This study underscores the pivotal role of domestic transportation infrastructure in mitigating information frictions and driving a country's international market integration.
AbstractHow do policy interventions diffuse through firm transaction networks? We design a novel two-stage randomization strategy that assigns a tax enforcement treatment at the seller–buyer link level and ensures separation within the network to identify direct and spillover effects. Using Ugandan transaction-level VAT data, we find that treated links correct 23.8% of reporting discrepancies, fourteen times the control rate. Corrections are driven by sellers—even when only buyers receive letters—providing evidence of communication between firms. Spillovers extend to other transactions, with persistent improvements in post-treatment reporting. Sellers evade by reclassifying firm-to-firm transactions as unverifiable final sales, weakening the VAT’s self-enforcing property.
  • “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.

Selected Work-In-Progress

Other Working Papers

  • “Geographic Fragmentation in a Knowledge Economy”, with Yang Jiao
    (paper)
AbstractThis paper explores how internet technology advancements drive cross-city collaborations (or "geographic fragmentation"). We use a spatial equilibrium model with cross-city production and skill heterogeneity to analyze the effects of reduced communication costs on domestic fragmentation. Our model suggests that better internet leads to increased production fragmentation, concentrating skilled workers in larger cities and reducing their numbers in smaller ones. Empirical validation using a novel instrumental variable approach confirms these predictions. Our calibrated model indicates that internet advancements have increased real wages for both high- and low-skill workers, with welfare improvements partly due to spatial reorganization from enhanced production fragmentation.
 

Teaching

I teach (taught) the following courses

INSEAD

  • Managerial Economics (MBA, Executive MBA), Econometrics (PhD)

Columbia University

  • International Trade (Undergraduate)
 

Contact

1 Ayer Rajah Ave, Singapore 138676
INSEAD

lin.tian [at] insead.edu