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Highlights: • Ambitious green policies that improve environmental quality while maintaining economic growth do not have to harm overall employment—if they are well implemented. • Green policies can achieve job creation in a number of ‘green’ economic sectors and through a transition of the economy towards more labour-intensive services sectors, while job destruction especially occurs in ‘brown’ sectors whose activities get replaced by green sectors. The knock-on effects on employment in other sectors can also be significant. • The use of government revenues from environmental tax reform for lowering labour taxes, mitigating undesirable distributional consequences and funding education and training programs can be crucial in achieving positive overall employment outcomes from green policies. • Well-functioning labour markets are important to achieve a smooth transition and reintegrate workers who lose their jobs. • Existing labour market policy tools are largely sufficient but can be applied more effectively. Education and training systems that prepare workers for future labour demand needs are especially important to smooth the transition. Special attention should also be paid to regions with a high share of workers in ‘brown’ sectors. • Further research is required to quantify all employment dimensions of green policies, not least with respect to within-sector firm level effects, circular economy policies and the broad interactions with socioeconomic trends.