Unraveling the Effects of Economic Growth and Unemployment on Tobacco Use: A Panel Data Approach.

INTRODUCTION

The economic situation is recognized as a significant factor influencing tobacco consumption. Accordingly, this research aims to investigate the relationship between economic growth, unemployment, and tobacco use.

METHODS

This investigation employs data from 1985 to 2019 to elucidate the relationship between economic growth, unemployment, and tobacco consumption in a select group of Organization for Economic Co-operation and Development countries. Employing Pedroni and Johansen-Fisher panel co-integration tests, we assess the co-integrating relationships. Furthermore, FMOLS and DOLS techniques are applied, complemented by the Dumitrescu-Hurlin panel causality test.

RESULTS

FMOLS and DOLS results suggest that a 1% increase in gross domestic product (GDP) leads to a 6.46% and 7.29% rise in tobacco consumption, respectively, while GDP squared results in a 0.39% and 0.43% decrease. However, both tests failed to establish a significant relationship between tobacco consumption and unemployment. Co-integration was confirmed by Johansen-Fisher and Pedroni tests. Dumitrescu-Hurlin causality tests revealed the direction of Granger causality from economic growth to tobacco consumption, but not with unemployment.

CONCLUSION

Tobacco consumption declined across all countries studied. Economic growth shows a positive association, while GDP squared has a negative association, indicating an inverted U-shaped relationship. No significant relationship was found with unemployment in the employed tests.

IMPLICATIONS: In addition to the measures implemented by countries to reduce tobacco consumption, economic factors also exert a significant relation with smoking behavior. The available results suggest that economic growth is initially associated with an increase in tobacco consumption but the reduction in later stages indicating a long-term inverse relationship between economic growth and tobacco use.