Faces of the Atlanta Fed: Lei Fang of the Research Department

May 29, 2018


Lei Fang is a big-picture thinker, so it's no surprise she has an affinity for economics. She is a research economist and associate adviser on the macroeconomics and monetary policy team in the Atlanta Fed's Research Department.

Fang studies how economies grow and develop and the effect of government policies on labor market dynamics. Her research has examined the differences in time spent on home activities and on market work in industrialized nations and helped explain how heavy regulation and high barriers to business entry stifle productivity in developing countries.

"I was curious to know why there was fast growth in some countries but not in others, why some economies perform better, and why some technologies emerge in this country but not others," Fang said in explaining her decision to pursue a career as an economist. "I can use the models and tools I've learned to study real-life issues."

photo portrait of Lei Fang
The Atlanta Fed's Lei Fang. Photo by David Fine

She is especially interested in learning why labor market participation varies across demographic groups and how countries compare with the United States on economic measures such as productivity. Fang is currently working on a project to explore the structural transformation between goods and services industries in China.

Making the connection between theory and data

Pedro Silos, a former Atlanta Fed colleague who is now an associate professor in the economics department at Temple University, said Fang has a unique ability to see how economic theories and data work together in answering a question. "Some people are very good with the theory. Others are good with the data," he said. "She's very good at connecting the two." At a place like the Atlanta Fed, which looks to conduct research that can help in formulating policy, that quality is particularly useful, he added.

Silos, who spent a decade as a research economist at the Atlanta Fed, and Fang worked on a number of projects, including a 2012 paper that studied the effects of unemployment on wage changes of hourly workers during the three most recent U.S. recessions. They are currently collaborating on research exploring how the amount of time and expenditures allotted to work, home, and leisure activities differs by educational levels.

"Lei asks the right questions," Silos said. "If you talk to her about your own work, she provides very good feedback."

Born in China's Shaanxi Province, Fang earned a bachelor's degree in economics from Peking University. She received a master's degree and PhD in economics from Arizona State University, where she studied under noted economist Richard Rogerson, whose work concentrates on the effects of labor market regulations and business cycle fluctuations. Edward Prescott, the 2004 Nobel Memorial Prize winner, was on Fang's PhD committee.

Rogerson, who is now the Charles and Marie Robertson Professor of Public and International Affairs at Princeton University, taught Fang not only how to use economic models and tools but also the importance of rigorous academic thinking, she said. "The interaction with him has shaped my career."

She interviewed with the Atlanta Fed 10 years ago. Her work at the Bank has taken her "all over the place," she said, including to several Asian and European countries. "The department provides a lot of opportunities to interact with other academics," she said.

Away from the office, Fang spends time with her son and husband, who works as an engineer. She visits China at least once a year, usually during the summer, to reconnect with family members.

Subsidies and women's work

Her most recent research takes a look at the effect of taxes and social subsidies—or government programs that provide assistance for children, the disabled, or elderly—on labor market participation across gender-skill groups. Working with two other researchers, Fang analyzed data from the United States and European countries.

They found that average market hours per adult are much lower in Europe than in the United States, and that the hours of women—especially those without a college degree—drove the majority of the differences. Upon further analysis, Fang and her coauthors found that higher taxes in Europe had a significant effect in reducing the hours that low-skilled women worked. "This group is at the margin," Fang said. "If you tax them, they just choose to work at home."

However, their research noted an exception in northern European countries, where taxes are high but less-educated women tended to put in longer hours on the job. Fang said the research suggested that the higher subsidies on home care offered by northern European countries provided an incentive for lower-skilled women to spend more hours in the marketplace as opposed to staying at home. "Subsidies have a bigger effect on women than men, especially for less-educated women," Fang said, adding that because females provide most of the care at home, the assistance generally benefits them more.

Fang said the research has implications beyond Europe and suggests that certain policies, such as social subsidies for family care, can encourage more women to participate in the labor market. Maximizing employment is part of the Federal Reserve's dual mandate from Congress, along with promoting stable prices. "Understanding the effects of subsidies or taxes on the labor supply will help us in the policymaking process," Fang said.

photo of Karen Jacobs
Karen Jacobs

Staff writer for Economy Matters

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