Resource efficiency and circular economy policies aim at reducing resource intensity and use throughout the economy, thereby decreasing environmental impacts. Besides the environmental benefits expected from these policies, potential employment benefits are often emphasised, which would follow the anticipated structural changes in the economy from material-intensive to more labour-intensive activities. However, the size of the employment effect is still unclear and difficult to quantify. To date, the quantitative literature on the employment impacts of the circular economy is still scarce. This study is the first of its kind to review the available studies on this increasingly important policy issue.

An analysis of global sectoral economic data in 2011 reveals that just four material-intensive sectors (i.e. construction, food products, primary metals and non-metallic minerals and power generation and distribution) account for almost 90% of global material use, while relying on only 15% of the workforce. This suggests that overall job losses resulting from policies that tackle materials consumption might be modest. This loss could potentially be more than compensated by job creations in more labour intensive sectors, most notably services.

There is a limited, but growing body of work that employs quantitative models to assess the employment implications of the circular economy transition. This paper reviewed 47 scenarios from 15 modelling studies. Many of them are regional and only four are global assessments. The review suggests that the employment gains of resource efficient and circular economy policies range between 0 and 2%, with one study predicting employment gains up to 7%. Only three scenarios find slightly negative employment results. The scenario design among the studies varies widely, but in general, most simulations revolve around material taxes aimed at reducing virgin material consumption and increasing resource efficiency. In some simulations, the generated tax revenues are redistributed to reduce distortionary labour taxes, which is commonly referred to as an environmental tax reform. In such scenarios, the positive employment effect is found to be stronger by around 2 percentage points.