Question

According to human capital theory, colleges may not pay students their full marginal product because those students may be receiving general training in two forms. The first is that, through attendance at classes, the student athletes increase their stock of general human capital, which can be used to increase future earnings. The second is that student athletes also receive general training in their chosen sport, which can be used to increase productivity (and so also wages) at the professional level. In other words, the education student athletes receive (both in the classroom and on the field) should considered part of their compensation. Do you think that this theory is sufficient enough to argue that a scholarship is sufficient compensation for student athletes? Defend your answer.

Answer 1

According to the human capital theory, colleges may not pay students their full marginal product as they receive general training in two forms,

First through, Attendance at classes; Second through, General training in chosen sport.

Thus according to me this theory is sufficient enough to argue that a scholarship is sufficient compensation for student athletes because by decreasing the marginal product, colleges get to target much more students than otherwise it would have been possible for them. If they were to equalize pay to their full marginal product, they would not be able to give opportunities to several other athletes who are also capable enough.

By providing a scholarship, the colleges are able to cover the most important cost of students, which is productive, and which will help them increase their earnings, it is not that they are providing scholarship so that the students would just attend the college and not learn anything, by giving payout in two forms, the students' future is indirectly assured.

If suppose the college instead paid the athletes which covers the tuition fees and cost of training and leaves enough capital in the hands of the athletes, it might lead to them not working as hard enough, because they feel they have received the fruits of labor early on and there is no need to work hard, as they have some amount of money saved. On the other hand by providing a scholarship, the student athletes ensure they work hard enough in order to reach up a milestone, so that they make good use of the scholarship and colleges are able to share the benefits with more than a few athletes by distributing the costs.