Jobs in the loop: Tackling regional employment challenges in Europe’s circular economy transition

This article investigates the labour-market consequences of the circular economy (CE) transition across Euro Area regions. We build a NUTS‑2 × year panel (2012–2022) that aggregates firm‑level data with granular industry detail and exploits cross‑regional variation in the EU Cohesion Policy disbursements targeted to CE‑related projects in the last programming period as a measure of local transition intensity. Linking these disbursements to employment dynamics, we estimate models with region and year fixed effects and rich details for sectoral composition to classify different types of regional labour markets and assess whether CE investment translates into net job creation or reallocation. We document systematic heterogeneity: In some regions, there is a net growth in jobs in repair, reuse, remanufacturing, recycling, and secondary raw materials, while others face larger losses in other resource‑intensive industries. Net of the transition’s aggregate benefits, our estimates imply a spatial mismatch between where new CE jobs emerge and where incumbent workers are most exposed to displacement. We conclude that in the coming mid-course adjustments, policymakers should focus on responding with place‑sensitive targeting and complementary measures; hence, investments align better with local assets and needs. In this sense, the study provides actionable evidence for implementing changes to the EU’s circular‑transition agenda in ways that maximize benefits and mitigate losses, supporting a just transition and equitable labour‑market outcomes across diverse regional economies.