I integrate Current Population Survey data from 2005 through 2010 with data on a wide range of employee benefits to compare the cost of those benefits for federal employees and for workers in the private sector who have similar observable characteristics. Federal benefits were about 48 percent higher, on average, than the benefits received by similar private-sector workers, which led to roughly a 16 percent difference in total compensation (the sum of benefits and wages). Much of the higher cost of federal benefits stems from differences in retirement benefits. The government provides employees defined-benefits pensions and subsidized health insurance in retirement; arrangements that have become uncommon in the private sector. The distribution of compensation also differed between the sectors, such that less-educated federal workers tended to earn much more than their private-sector counterparts, whereas highly-educated workers tended to receive higher compensation in the private sector.
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