Environmental Phillips Curve (EPC) hypothesis has received some attention in literature recently. However, in the context of Kingdom of Saudi Arabia (KSA), the proposed EPC hypothesis has not been studied yet. Accordingly, this research paper collected data of KSA from the credible sources for the period 1991–2023 to test the validity of the EPC hypothesis both in the long run and short run. For the estimation of models, the present study adopted the recently developed “Autoregressive Distributed Lag (ARDL)” approach of cointegration. Our results based on the cointegration technique confirmed the validity of the EPC hypothesis by demonstrating a negative relationship between the unemployment rate and CO2 emissions both in the long and short run. The causality analysis also demonstrated a unilateral influence of unemployment on environmental degradation. It means that higher unemployment reduces environmental pollution due to declining economic activities. Besides the EPC hypothesis, our results also proved the significant adverse impact of energy use on the quality of the environment not only in the long run but also in the short run. Similarly, we found significant evidence that openness to international trade degrades the environment in the long run and improves it in the short run. This is a pioneering study on the relationship between unemployment and environmental degradation in the context of Saudi Arabia. Hence, we expect that the outcome of this study will add to policymaking regarding the management of unemployment rate and environmental degradation in KSA.
Alsabhan et al. (Sat,) studied this question.