Who's afraid of a globalized world? Foreign Direct Investments, local knowledge and allocation of talents

► The paper studies the distributional effects of globalization. ► Agents are heterogeneous in talent and in the knowledge of the economic environment. ► Agents can learn about the foreign economic environment. ► The steady state relationship between globalization and income is U-shaped. ► This is consistent with empirical evidence from the U.S. and the U.K.