Nexus Between Environmental Degradation, Unemployment and Economic Growth: Empirical Evidence from Oman

Abstract

The Environmental Kuznets Curve posits that economic growth is positively related to environmental degradation. As employment generation is directly related to economic growth, a trade-off between environment quality and sustaining livelihoods emerges. Rahman (2021) termed this environment degradation unemployment nexus as Environmental Phillips Curve (EPC). The current study examined the asymmetrical relationship between environmental degradation and unemployment rate for Sultanate of Oman for the period 1991 to 2020. The study examined the EPC hypothesis by considering environmental quality as a function of unemployment, economic growth and trade openness. Environment quality is proxied by per capita carbon dioxide emissions, economic growth is measured as annual growth rate in real Gross Domestic Product and trade openness is defined as sum of exports and imports as a percentage of GDP. Data on all the indicators is sourced from the World Development Indicators.The study used the Non-Linear Auto Regressive Model (NARDL) proposed by Shin et al (2014). The findings of the study validated the positive relationship between unemployment, economic growth and carbon emissions. These findings highlight the need to find environmentally viable employment generation projects.