Labour Market Consequences of a Transition to a Circular Economy: A Review Paper

Circular economy policies aim at reducing resource intensity and use throughout the economy, while also seizing economic opportunities. Employment benefits are also often emphasised. However, the employment effect of circular economy policies is still unclear and difficult to quantify, as the literature on this topic is still relatively new. This paper is the first of its kind to review the state-of-the art literature on the labour market implications of a transition to a circular economy. The review focuses in particular on ex-ante economic modelling studies and compares their employment and resource efficiency outcomes. The reviewed studies suggest that a transition to a circular economy can generate a positive net effect on employment, though the labour implications can differ widely across different sectors and regions and some may experience significant losses. Furthermore, the way in which revenues from materials taxes are recycled can substantially influence the employment outcome.