Personnel records are used to examine compensation, recruitment, and retention of a group
of very highly skilled workers: civilian scientists and engineers in U.S. Department of Defense
laboratories. In contrast to the private sector, returns to skills were largely flat for this group
from 1982-1996. Despite this, quality and performance of recruits relative to earlier cohorts,
and of those retained relative to those who left, remained stable. One explanation is the
importance of defense-industry-specific human capital. These results hold for three different
pay plans, including the federal government?s primary plan and two intended to introduce
greater flexibility in personnel management