YUE YU

Welcome! I am an assistant professor in economics at the University of Toronto, with cross-appointment at UTSC Management and the Rotman School of Management. My research interest lies in urban economics, economic geography, international trade, and development economics.

Email: yueyu.yu@utoronto.ca

CV is available here.


If you are an undergrad or graduate student looking for RA work, please email me with a CV or resume, as well as an unofficial transcript. In your email, please also include a couple sentences about your research interests.

Working Papers

Awarded UEA Prize for Best Student Paper (Honorable Mention) and EMUEA Kraks Fond Prize (Runner-Up), 2019

Abstract: This paper studies the distortionary effects of land-use regulations that preserve farmland from urban sprawl. I exploit a major policy restricting farm-to-urban land conversion in China -- the Farmland Red Line Policy -- to provide causal evidence on the negative impact of land-use regulation on local development, measured by GDP and population growth. To understand the aggregate impact of the policy, I develop a quantitative spatial equilibrium model that features endogenous land-use decisions. The calibrated model reveals a 7% loss in workers' welfare due to the policy. Furthermore, a cap-and-trade platform that allows local regions to exchange farmland preservation requirements can eliminate 60% of workers' welfare costs. The results suggest that fast-growing economies in developing countries need to design land-use policies carefully, as the welfare costs of poorly designed policies can be substantial.

Technical Note

Geographic Spillovers and Firm Exports: Evidence from China, with Lin Tian (INSEAD & CEPR)

Abstract: This paper examines the importance of domestic economic geography in a country’s export performance. We first develop a simple model in which geographic integration of exporters reduces international trade frictions. We test the model predictions by leveraging the expansion of China’s high-speed rail (HSR) as a quasi-experiment to provide plausibly exogenous variation in the extent of (effective) geographic integration among Chinese exporters. The analysis reveals strong evidence supporting the improved integration of exporters within the same sectors positively impacts a firm’s export performance both intensively and extensively. Additionally, we provide evidence consistent with the HSR connection strengthening knowledge spillovers among exporters to overcome information frictions in accessing foreign markets.

Work in Progress


The Value of Cleaner Waterways, with Qianyang Zhang (Columbia University)

This paper examines the economic benefits of cleaning up heavily polluted waterways in densely populated neighborhoods. We exploit the Black-and-Smelly Water Program in China as a natural experiment to identify the causal impact of cleaner waterways on local housing markets and business growth. First implemented in 2016, this program restored the heavily polluted waterways in China's 36 most developed cities. Using a Difference-in-Difference estimator, we find that the program mainly benefits the real estate properties within 1 mile of the cleaned-up waterways: The market values of these properties appreciated by 8% after the program. Furthermore, various service businesses thrived in the neighborhoods close to the cleaned-up waterways, which revitalizes the neighborhoods and contributes to increasing property values.


Local or Imported? Middlemen, Market Power, and Input Sourcing in a Network Economy, with Alan Griffith (University of Washington) and Jonas Hjort (Columbia University & UCL)

Input sourcing is central to the process of economic development. We first document that, contrary to conventional wisdom, the share of inputs originating abroad is almost as high in Uganda---a landlocked, low-income country---as in rich, open economies. The monthly transaction-level data we use, which cover the universe of formal, firm-to-firm and firm-to-foreign country trade in the Ugandan economy, also reveal that indirect imports are sourced from few firms, and via short supply chains. Together these three ``new'' facts motivate a model of input sourcing in a networked economy. Inputs, output quantities, and output prices are determined by firms maximizing profits subject to input prices and both a domestic and international sourcing network. Decreases in the cost of imports lead to lower prices for importers' output in the domestic market. We exploit exchange rate shocks and firms' prior direct and indirect import origins to test the model's predictions. When the relative cost of foreign goods decreases, direct importers import more. However, first- and higher-order indirect importers import less, instead buying more foreign content domestically. Pass-on price effects appear to ``magnify'' network structures that economize on high fixed costs of importing, widening access to foreign content but hindering substitution to direct international trade.


Teaching

I serve as an instructor at the University of Toronto-Scarborough for the following courses:

  • Introduction to Regression Analysis

  • Theory and Practice of Regression Analysis