An article in the New York Times of September 20 by Louise Story, entitled "Many Women at Elite Colleges Set Career Path to Motherhood," reports the results of surveys and interviews concerning career plans of women at the nation's most prestigious colleges, law schools, and business schools. Although not rigorously empirical, the article confirms--what everyone associated with such institutions has long known--that a vastly higher percentage of female than of male students will drop out of the work force to take care of their children. Some will resume full-time work at some point in the children's maturation; some will work part time; some will not work at all after their children are born, instead devoting their time to family and to civic activities. One survey of Yale alumni found that 90 percent of the male alumni in their 40s were still working, but only 56 percent of the female. A survey of Harvard Business School alumni found that 31 percent of the women who had graduated between 10 and 20 years earlier were no longer working at all, and another 31 percent were working part time. What appears to be new is that these earlier vintages did not expect to drop out of the workforce at such a high rate (though they did), whereas current students do expect this. That is not surprising, since the current students observe the career paths of their predecessors. So, contrary to the implication of the article, there is no evidence that the drop-out rate will rise. The article does not discuss the interesting policy issues presented by the disproportionate rate of exit of elite women from the workforce. Nor does it have much to say about why women drop out at the rate they do. The answer to the latter question seems pretty straightforward, however. Since like tend to marry like ("assortative mating"), women who attend elite educational institutions tend to marry men who attend such institutions (and for the further reason that marital search costs are at their minimum when the search is conducted within the same, coeducational institution). Those men have on average high expected incomes, probably higher than the expected incomes even of equally able women who have a full working career. Given diminishing marginal utility of income, a second, smaller income will often increase the welfare of a couple less than will the added household production if the person with the smaller income allocates all or most of her time to household production, freeing up more time for her spouse to work in the market. The reason that in most cases it is indeed the wife (hence my choice of pronoun) rather than the husband who gives up full-time work in favor of household production is not only that the husband is likely to have the higher expected earnings; it is also because, for reasons probably both biological and social, women on average have a greater taste and aptitude for taking care of children, and indeed for nonmarket activities generally, than men do. But it is at this point that policy questions arise. Even at the current very high tuition rates, there is excess demand for places at the elite colleges and professional schools, as shown by the high ratio of applications to acceptances at those schools. Demand is excess--supply and demand are not in balance--because the colleges and professional schools do not raise tuition to the market-clearing level but instead ration places in their entering classes on the basis (largely) of ability, as proxied by grades, performance on standardized tests, and extracurricular activities. Since women do as well on these measures as men, the student body of an elite educational institution is usually about 50 percent female. Suppose for simplicity that in an entering class at an elite law school of 100 students, split evenly among men and women, 45 of the men but only 30 of the women will have full-time careers in law. Then 5 of the men and 20 of the women will be taking places that would otherwise be occupied by men (and a few women) who would have more productive careers, assuming realistically that the difference in ability between those admitted and those just below the cut off for admission is small. While well-educated mothers contribute more to the human capital of their offspring than mothers who are not well educated, it is doubtful that a woman who graduates from Harvard College and goes on to get a law degree from Yale will be a better mother than one who stopped after graduating from Harvard. But I have to try to be precise about the meaning of "more productive" in this context. I mean only that if a man and woman of similar ability were competing for a place in the entering class of an elite professional school, the man would (on average) pay more for the place than the woman would; admission would create more "value added" for him than for her. The principal effect of professional education of women who are not going to have full working careers is to reduce the contribution of professional schools to the output of professional services. Not that the professional education the women who drop out of the workforce receive is worthless; if it were, such women would not enroll. Whether the benefit these women derive consists of satisfying their intellectual curiosity, reducing marital search costs, obtaining an expected income from part-time work, or obtaining a hedge against divorce or other economic misfortune, it will be on average a smaller benefit than the person (usually a man) whose place she took who would have a full working career would obtain from the same education. The professional schools worry about this phenomenon because the lower the aggregate lifetime incomes of their graduates, the lower the level of alumni donations the schools can expect to receive. (This is one reason medical schools are reluctant to admit applicants who are in their 40s or 50s.) The colleges worry for the same reason. But these particular worries have no significance for the welfare of society as a whole. In contrast, the fact that a significant percentage of places in the best professional schools are being occupied by individuals who are not going to obtain the maximum possible value from such an education is troubling from an overall economic standpoint. Education tends to confer external benefits, that is, benefits that the recipient of the education cannot fully capture in the higher income that the education enables him to obtain after graduation. This is true even of professional education, for while successful lawyers and businessmen command high incomes, those incomes often fall short of the contribution to economic welfare that such professionals make. This is clearest when the lawyer or businessman is an innovator, because producers of intellectual property are rarely able to appropriate the entire social gain from their production. Yet even noninnovative lawyers and businessmen, if successful--perhaps by virtue of the education they received at a top-flight professional school--do not capture their full social product in their income, at least if the income taxes they pay exceed the benefits they receive from government. Suppose a professional school wanted to correct the labor-market distortion that I have been discussing. (For I am not suggesting that the distortion is so serious as to warrant government intervention.) It would be unlawful discrimination to refuse admission to these schools to all women, for many women will have full working careers and some men will not. It would be rational but impracticable to impose a monetary penalty on the drop-outs (regardless of gender)--making them pay, say, additional tuition retroactively at the very moment that they were giving up a market income. It would also be infeasible to base admission on an individualized determination of whether the applicant was likely to have a full working career. A better idea, though counterintuitive, might be to raise tuition to all students but couple the raise with a program of rebates for graduates who work full time. For example, they might be rebated 1 percent of their tuition for each year they worked full time. Probably the graduates working full time at good jobs would not take the rebate but instead would convert it into a donation. The real significance of the plan would be the higher tuition, which would discourage applicants who were not planning to have full working careers (including applicants of advanced age and professional graduate students). This would open up places to applicants who will use their professional education more productively; they are the more deserving applicants. Although women continue to complain about discrimination, sometimes quite justly, the gender-neutral policies that govern admission to the elite professional schools illustrate discrimination in favor of women. Were admission to such schools based on a prediction of the social value of the education offered, fewer women would be admitted.