With reference to the Feenstra-Hanson model of offshoring, if Japan is skilled-labour abundant and Mexico is unskilled-labour abundant, once the most unskilled-labour intensive task is offshored from Japan to Mexico, the skilled-unskilled wage ratio will:

(a)Decrease in both countries.

(b)Increase in Japan but decrease in Mexico.

(c)Decrease in Japan but in increase in Mexico.

(d)Increase in both countries.

Explain your answer clearly the option chosen.

The answer is B, but I don't understand why.

Tutorial question