This paper considers adjustment in a dynamic specific-factors model with endogenous capital stocks. Investment is analyzed under the assumption that expectations are rational with respect to qualitative aspects of the adjustment process (qualitatively rational expectations, QRE). QRE leave...

This paper shows that endogenous adjustments in the composition of labour supplies magnify the effects of changes in commodity prices on the measured skill premium under quite plausible conditions. These composition effects arise from decisions of individuals with heterogeneous inherent...