The Relationship Between Environmental Sustainability, Economic Growth, and the Creation of Green Jobs in Saudi Arabia

This study examines the long- and short-run determinants of green employment in Saudi Arabia over the period 1990–2024 using an Autoregressive Distributed Lag (ARDL) bounds testing framework within an error-correction model. Six macroeconomic and structural variables are analyzed: renewable energy capacity, GDP growth, domestic credit, urbanization, foreign direct investment, and the Vision 2030 policy regime shift. Supplementary analyses test the Environmental Kuznets Curve (EKC) hypothesis and map causal relationships using pairwise Granger causality tests. The bounds test indicates long-run cointegration among the variables (F = 8.45, exceeding the 5% I(1) critical bound of 3.61). The model explains 89% of the variation in log green employment (R2 = 0.89) and passes standard diagnostic tests for serial correlation, heteroskedasticity, normality, and parameter stability. Three correlates of long-run green employment are identified. The post-2016 dummy used to capture the Vision 2030 regime shift is associated with the largest coefficient in the long-run equation (θ = 1.75, p = 0.008), although this estimate should be interpreted with caution because the dummy absorbs all post-2016 changes, including policy effects, the rapid expansion of renewable capacity, broader institutional reforms, and possibly changes in measurement practices. Renewable energy capacity is the primary continuously measurable driver (θ = 0.145, p = 0.018), with Toda–Yamamoto modified Wald tests indicating a bidirectional predictive relationship between investment and employment. Urbanization exerts a significant positive long-run effect (θ = 0.098, p = 0.001). The error correction term (δ = −0.520, p < 0.001) implies equilibrium reversion with a half-life of approximately one year. The EKC hypothesis is not supported in the Saudi context, suggesting that active decarbonization policy—rather than income-driven structural change alone—is needed for environmental improvement. The findings carry implications for Vision 2030 implementation and for other resource-dependent economies undertaking structural green transitions.