According 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.
According 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.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter9: Applications Of Cost Theory
Section: Chapter Questions
Problem 4E
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According 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.
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